Executive Leadership Post Business Acquisition

Aug 28, 2018

This summer on a road trip from Seattle to see the Canadian Rockies my family took turns playing disc jockey selecting songs to share from each person’s personal playlists.  My daughter, an aspiring actress, often selected songs from musicals.  One of her favorite musicals is Hamilton and its showtunes frequently filled the air.  I have great respect for songwriters and have listened intently for years to both melodies and lyrics looking for artistic and literary genius.  Listening to the lyrics of “What Comes Next” from Hamilton (https://www.youtube.com/watch?v=jKw6n0PnTMY) the following words resonated with me from a professional perspective as a mergers & acquisitions intermediary:

“Do you know how hard it is to lead?  You’re on your own. Awesome…wow.  Do you have a clue what happens now?”

In facilitating the sale of privately held companies and family owned businesses where ownership fills the CEO and/or President position, I often sit in buyer seller meetings thinking about the following transaction truism.

A given in the transaction is that executive management post transaction is going to better or worse than it has been historically, it is not going to be exactly the same. 

IBA, as the oldest, seller representation, business brokerage firm in the Pacific Northwest, is blessed to have a wonderful group of past clients who successfully ran their companies for profit, to obtain market share, and to build a positive reputation with customers, vendors, and employees.  A significant majority of our customers are selling because they want to sell (either to retire or to move onto a new entrepreneurial project), not because they need to sell.  They are the Lou Piniella, Don James, and Lenny Wilkens of their fields.  They are people to be respected & admired.  I can honestly say that I have learned many valuable business & life lessons from my past clients for which I am eternally grateful.  Sitting in buyer seller meetings I often evaluate the potential buyer’s ability to fill the seller’s executive shoes.

I am happy to report after 24 years and facilitating over 300 transactions, that an overwhelming majority of the time the buyer in IBA facilitated transactions experiences success equal to or greater than their predecessor.  The ones that are most successful often have the following four characteristics:

  1. They are willing to learn & listen to the previous owner during the transition period.
  2. They take the time to assess systems, infrastructure, products, services, and employees prior to making changes.
  3. They are willing to hire professionals & quality employees to support their efforts, when necessary.
  4. They have the confidence to make decisions and deploy resources. Entrepreneurship is the ultimate competitive sport.  If you are not willing to take risks and make executive decisions, you will not be successful as a business owner.

The key is that the business buyer is ready to lead and knows what happens now when they complete the transaction.  In this regard, I applaud the Small Business Administration (SBA) for its underwriting requirement when guaranteeing a business loan that the borrower create a business plan for post-acquisition.  This requirement forces a buyer to think and plan prior to making a life changing decision fueled by emotion.

Each business (or for that matter athletic team) can be successful under successor leadership.  I think most sports fans living in Seattle would agree that Scott Servais is the Mariners best manager since Lou Piniella, Chris Peterson is the best Husky football coach since Don James, and that George Karl, if not for Michael Jordan, would have lifted a NBA championship trophy like Lenny Wilkens.  Nothing makes our business brokerage team happier than to hear about future success by a business buyer, or even better to represent that party in the future sale of the company and help them reap the equity reward of their efforts as business owners.

If you interested in selling or buying a business in the Pacific Northwest in a “win-win” transaction facilitated in an environment of full disclosure employing best practices, we would welcome the opportunity to talk with you.  A successful business transition is good for the seller, buyer, and business broker.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.