A key factor in any business sale is who is going to run it for the new owners. If this is not immediately clear the deal is usually fatally wounded. There are degrees of concern though. A trade sale that can be quickly absorbed into an existing business has a lower level of concern than a sale to an investor or private equity who will be particularly concerned with the quality of management, their stickiness and their ability to step up to new roles.
Any plan to sell a business needs to understand the value good employees bring to the deal. Indeed, key staff may have greater opportunities opened to them within the larger organisation and thus welcome the opportunity with open arms. Many though consider it a potential challenge and take the opportunity to leave current employment.
Thus you must understand the value key people bring to a potential new owner and from this develop a plan to ensure continuity in this early part of new ownership.
From advising business owners over the years on selling their companies, this is a key first question and often one we look to fix very early in the process of building a valuable business. They key is aligning what is good for the business, the business owner and the key employees to create a win-win situation.
Through strong management the business grows and becomes more valuable, the owner can step back and be released from day-to-day responsibility and key employees are rewarded in the short-term with bonuses and in the longer term with accumulated value on exit.
So what are the key elements that make a good employee reward scheme?
In summary, there are reward structures that can be put in place to ensure that key employees are retained and long-term shareholder value is secured and grown.
Crowe partner Gerard O’Reilly manages our Business Value Builder Programme, a practical and effective programme for company owners to build lasting value in their business. Contact Gerry if you would like to find out how he can help you achieve your personal and business goals.