Selling a Business Successfully - Passing The Torch

Selling a Business Successfully - Passing The Torch

Capture your key actions and dates in the sale contract, and keep notes about what you do, how you do it, and how best to ease responsibilities onto the proper successor. Although this seems an administrative bother, your notes can be invaluable in capturing nuances of running your company. We know of one company that assigned the CEO an administrative assistant specifically dedicated to staying by his side to chronicle what he was doing and how he made decisions.

Be sure to integrate important transition dates into the communication plan. Determine who needs to know when you are leaving and who has taken over responsibilities. Your purpose is to meet all contractual commitments within a declared time in a way that reflects your goals, the new owner's goals, and those of the business. And you want to make sure these changes are known appropriately and the handoffs occur smoothly for everyone.

A signed contract in hand, you and the new owner can build on preliminary transition work you completed earlier. Together, you should chalk out a properly constructed, detailed, and realistic timetable. This formal, written timetable should stipulate when transfer of ownership is complete, when day-to-day responsibilities shift over, and when you depart.

As these details are defined, you can begin to think through the impact the change of ownership will have on others. It also should include important metrics-for instance, earn-outs agreed to in the sale contract.

When reviewing metrics such as earn-outs, assure they do not set you and the new owner at cross-purposes. We recently were involved in a fairly common situation in which earn-out metrics became a source of conflict.

The seller's earn-out was based on business growth and profitability. The buyer, after acquiring the company to integrate it into a larger one, wanted to install new computer systems. He also wanted to charge the former business owner for the systems, dedicate some of the former business owner's staff to making them work, and take his people out of the field for training. The seller saw the expense and diversion of staff as a threat to his earn-out, and he began working against the buyer on it and other initiatives. When selling a company, be sure to have hones conversations up front.

I invite you to use these ideas during your journey to sell a business.

For twenty-five years, Marian Cook has been a trusted advisor to the hundreds of owners and executives worldwide whom she has helped to improve business performance and value. She has worked globally with firms ranging in size from start-ups to Fortune 500 companies. She has helped them develop and execute their strategies, realize their goals, and maximize their businesses' valuations and their transitions to new ownership.

Marian Cook is the host of the "Selling Your Business for More" telesummit featuring 15 world-class experts on selling a business, please visit please visit our Business Transition Experts "Education at Your Desktop" site at: http://www.businesstransitionexperts.com/telesummit.

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