A couple of weeks ago, CEO Exclusive Radio had me as a guest, and I was asked, among other things, about what buyers look for in a management team. So, if you’re a CEO/Owner getting ready to sell your business, here are four key points.
1. Make sure that your team knows your business strategy and everything about it. Strategies cannot live in the CEO’s mind, where, unfortunately, many reside in smaller companies. Your team needs to all speak to it as “one” and understand how to execute it. Provide a clear strategy everyone can understand. It will be better than an overreaching complex set of impossible goals.
2. Is your team “navy seal” trained to cover any gaps if you’re not around? If the team has been taking direction a majority of the time, how will they be of value to a new owner? Buyers are willing to take “economic” risk but not “operational” risk and thus are looking at a team that can deal effectively with adversity. Make sure everyone on the team can explain their critical role, as well as those of others on the management team to any potential buyer. They should be comfortable with the buyer’s discovery team discussing how your business is growing and how it’s profitable.
3. The company mission must be a goal your management team understands. Communicate to all regardless of their role and ensure they know their responsibility for the bottom line so they can make it happen at every turn, whether you are there or not. If they are salesmen, do they only know how to sell? Be aware that a killer sales team may not hold the same value to a potential buyer. A new owner will need a business with a complete and diverse management team that runs like a well-oiled machine. Having to replace the management team reduces the value to the buyer.
4. Inform your team early in the decision process, so they have a reason to stay through the merger or sale. Give them a reason to stay. Clean out any staff that doesn’t meld with the idea of a transaction and how they can contribute to the growth and profit possibilities. Every team member must be on board and be able to act as a spokesperson for the company in a positive way. New owners want to come into an environment where HR doesn’t have to solve problems from the get-go.
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