Who will survive the sale of your business?

Depends whether you think with your head or your wallet...

When it comes to the sale of your business, where does your staff stand in terms of either being rewarded or retained by the new owner?

Recently I was involved in discussions with a Principal of an advisory group who was looking to find a buyer for his business. Along with the Principal were two support staff who were well known to the clients and who were keen to continue working.

The business was financially and structurally sound, and attracted a lot of interest from buyers. One bid in particular was generous from a price perspective, with the prospective buyer prepared to pay above market multiples for the business. However, one of the conditions of purchase was that neither the Principal, nor his staff, would be required once the contract had been completed.

What do you think the Principal did?

All too often the ‘soft’ issues relating to staff are not adequately addressed by both sellers and buyers. Often, succession plans are not put in place that aim to help the Planner recognise those people, namely staff, who have helped them achieve financial success. Succession Planning is not just about realising the value you have built into your business, it is also about ensuring that the needs of your key staff are considered.

What would you have done if you were the planner? In this instance, the Principal rejected the offer. He needed to see that his staff were looked after, and also guarantee that his long standing clients would be looked after as well, in the absence of himself and his staff.

The goal, therefore, of a good Succession Plan is to try to minimise the effects of ‘culture shock’ created by hurried succession, and also to ensure that clients and staff are wholly considered and provided for. After all: ‘It’s not just about the money!’