Closing The Deal: Partnering Through the Sale of A Legacy Business
When it comes to preparing to sell a legacy business, one of the most critical steps for the buyer and seller is to work closely together. Without a close partnership during this process, the sale of the business can not only become a stressful situation for the buyer and seller, but it can also negatively impact the culture the business owner worked so hard to create. So the approach is critical when closing a deal for any sale of a legacy business. And if the partnership stays as the central goal, the sale will go smoothly and the legacy will live on!
So what is required when it comes to partnering well through the sale of a legacy business? Let’s look at the key areas that will make closing the deal a walk in the park.
Understand the Legacy & Vision
The very first step in building a strong partnership is taking time to understand the history and vision of the company. This will help set the stage for understanding what needs to be maintained, and possibly what needs to change. This step will take a decent amount of time but is not one to be rushed. After getting a full understanding of the history of the business, it will be important to work together to develop a shared vision for the future. Although this will primarily be the responsibility of the buyer, in the long run, creating a shared vision will allow both parties to have influence during this big transition.
This step is foundational to building a strong relationship and reinforcing the importance of carrying the legacy on well. Without this step, all subsequent actions will be a challenge.
Giving Space & Time
When working to close a deal, it is also important to give plenty of time to the process. Rushing the sale of the business will not only create challenges between the buyer and the seller, but also the staff and customers. It is not uncommon for the close of a business sale to take months if not, even years and the long-term game should be the highest priority. Give plenty of time and space to the process so everyone involved feels at ease.
Additionally, the buyer and seller will simply need to spend a lot of time together. During the pre-sale phase, once an understanding of the history and vision has been established, its important to understand each other’s philosophy and approach to business. There will need to be high-level discussions about business principles and also detailed conversations around the most difficult parts of the business that need attention to implemented the future vision. This includes allocating resources, investing in staff, developing culture, caring for customers and much more. These conversations ensure there are no surprises down the road for either party.
After a deal has been finalized, the buyer and seller will need to take their relationship to the next level professionally and personally. This includes partnering closely on communicating the upcoming news to the current staff regarding the business ownership transfer. This step is critical in maintaining a safe culture where current staff will know they have a place where their concerns can be heard and the transition will have minimal impact on them. It will also be important to determine what the business owner’s new role will be in the organization moving forward. Some owners like to stay involved at some level, while others will relinquish full control over to the new buyer. Whatever the agreement is, alignment is key to preventing any bumps in the road for all involved.
Keeping an Open Mind
In any type of business sale where the owner has put in their blood, sweat, and tears into running their business, there will naturally be a tendency to hold on to past approaches to the way they have done business. When buying a legacy business, the buyer should be to sensitive to this fact by not communicating all the changes you will implement. The key overall will be to keep an open mind on both sides of the transaction to ensure no major challenges present themselves.
For the seller, it will be important to realize that not everything will stay the same. As much as both sides work to reduce ripples during this transition, changes are inevitable. One of the best things the seller can do is to let go of the minor things that need to change and be flexible on the major things that might need adjustments. This will ensure the new owner has the freedom to step in and make changes necessary to continue to see the business grow.
For the buyer, it’ll be important to not change everything, especially at once, or there could be resistance on the horizon. It is common for changes to become necessary, but the approach will need to be slow and steady in the beginning in order to build a relationship and trust with the team first. Ask more questions, you most likely know less about the company take the time learn. While doing this, allow there to be space for this transaction to go smoothly, and foster close relationships internally with the staff – it will be the foundation of future success.
Consider “What-If” Outcomes During The Transition
There will be plenty of planning and conversations to ensure the transition of this business to new owners goes smoothly, but not all plans will go as intended. One crucial step often missed during this type of transaction is considering and planning for what challenges may present themselves. It will be important both for the buyer and the seller to talk about “what if” scenarios regarding all aspects of the business.
Here are some examples:
- What if some of the workforce decided not to continue working during this time of transition? Where would this impact operations of the business first?
- What if a key leadership position decided to pursue an opportunity at a competitor? What gaps would that create? Is there a succession plan for each role?
- What if overall quality decreased during this transition? What steps will be taken to remedy it for the least amount of impact on the customer?
These are just a few examples of “what if” scenarios that might need to be considered.
In summary, ensuring that a business sale goes smoothly for the buyer and the seller is extremely important. There are many things to consider during this type of transaction, but the relationship between all parties involved must be the highest priority. If that is managed well, then most other items will fall into place. It is an exciting time and one that will also be filled with challenges – so keeping the lines of communication open, offering full transparency, and working as true partners during this transition will minimize any negative impacts on the business.
Here at Tsetserra Growth Partners, we know firsthand that it takes hard work and sacrifice to build and own a successful business. We don’t want to dismantle an owner’s legacy. Owners who transition with pride and confidence in their business’ future are our goal. We facilitate a smooth leadership handoff that maintains continuity for employees and customers.
For more information, contact us to discuss how we can serve you.