05 Aug 5 Tips for a Successful Ownership Transition
A successful ownership transition does not have to be difficult. In fact, with the right approach, you can learn how to make ownership transition a smooth process. Let’s take a look at five of the most trusted and proven tips for a successful ownership transition.
Tip 1 – Start Planning Early
Like virtually every endeavor in life, planning is prudent. The same holds true for ownership transition. Start planning your exit early and you will be rewarded. One of the key steps is to train your replacements. It is often necessary to determine, well in advance, exactly who the different leaders will be. It often takes several people to handle the responsibility shouldered by a single experienced owner.
Tip 2 – Make Sure Your Staff is Ready
Having a great staff and making sure your staff is ready for a change in leadership are two different things. It is wise to make certain that your staff is properly compensated well in advance. A best practice is to tie some of their compensation to their personal, team, and company goals. Otherwise, key people could leave and go to work with your competitors or even launch their own companies. In some cases it is better to promote from outside the company, as this move avoids disturbing the delicate interpersonal chemistry that often exists at a place of business. Either way, your buyers will want to ensure that knowledgeable and reliable staff members are in place to help them with the transition.
Tip 3 – Make Your Changes Quickly and Highlight Benefits
Do not let changes drag on, as this only causes confusion. Additionally, it is extremely important to outline for employees how the change in ownership will benefit them. It is essential that leadership is able to convince staff that coming changes will benefit all involved. Uncertainty tends to breed panic and confusion.
Tip 4 – There is No Replacement for Great Communication
Communication is always a business essential, and the same holds true for an ownership transition. New leaders must communicate effectively with the remaining staff that stays after the transition.
It is common for existing employees to have issues with new leadership. One way of dealing with this potential problem is for new leaders to acknowledge the success of the previous owners and employees. Highlight what went well in the past and why the new management is excited to build on that success. Taking these steps can go a long way to ease nerves. Future plans should be outlined and discussed with enthusiasm.
Tip 5 – Establish Consistent Communication
You should make a limited number of clear and easy to understand announcements about the transition. No one should be confused about what the transition will mean. The less room that there is to “read between the lines” the better. This will help to ensure that the staff is properly prepared.
By following these five tips, your transitions will go more smoothly. M&A advisors understand what it takes to ensure a successful ownership transition. There will always be surprises. but experienced advisors can help guide you through the ownership transition process.