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Leadership Transition

Updated: Feb 10, 2022

Preparation is crucial when selling a business

Delegating some responsibilities now will help you avoid a protracted *earn-out scenario post acquisition.

In a recent survey, the 5th most common reason for exit failure was blamed on owner reliance accounting for 18% of failed company sales. Like Gollum and the one ring, entrepreneurs find it difficult to relinquish control of their businesses or justify additional management costs.

Owner reliance is perceived as a risk by acquirers who offset the risk with protracted *earn outs and handover periods, tying the owner to the business for longer post acquisition. Most shareholders prefer quick exits, accepting offers with most of the consideration upfront and minimal *earn out. As a result owner reliance can become a deal breaker.

Do you work for your business or does your business work for you?

Sadly many SME business owners are unable to switch their phones off during holidays and don’t take sick leave. If you disappeared for a few months, would business performance suffer? If the answer is yes, then you have a problem with owner reliance.

Many owners want to avoid additional costs associated with management succession however, management succession in some form or other will be inevitable when you exit your business.

We work with you to identify and execute the changes needed to allow the business to be successful once you step away. Our services can be paused should you need more time to strengthen your management team.

For the sake of your family, your health and future extraction from your business you should consider management succession as part of your exit strategy now.

*earn-out - Where the vendor is required to remain with the business for a period of time to facilitate transfer to the new owners post completion. Often, payment of part of the sale proceeds are conditional requiring the vendor to achieve pre-defined performance targets during the handover period.

Call us on 01384 274 778 / 075 888 925 88 to discuss or go ahead and book a free consultation to explore your options.


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