Time and tide wait for no man – Geoffrey Chaucer, 1343 – 1400
Just as it is almost impossible to remain stationary on a bicycle that isn’t moving forward, a successful business must constantly be evolving and advancing, otherwise the component parts will atrophy and begin their inevitable decline. Every business is on the way up or on the way down. In which direction is your business headed?
Moving up requires the constant investment of energy, human resources and financial resources. Moving down occurs when the owner has lost interest, energy or no longer has access to the key resources required to move forward. When an owner is in the position of being unable (or unwilling) to move forward any longer, then the right answer is to actively seek a sale of the business before the decline begins and while the business is still valuable to a new owner who has the energy and resources to take it to a higher level.
All About Growing
Many blogs in this series have addressed various topics related to acquiring, maintaining and developing the critically important human resources that every company needs in order to survive and grow.
As we are an executive search firm, our primary focus is on how owners and senior executives, who have the responsibility for building a first-rate team, can identify the best people for every role and convince them to join their cause. We know that this is a difficult challenge for those charged with this responsibility and we know that there are two primary reasons why they struggle to do it effectively.
Both of these reasons have, at their root, a lack of time:
- Choosing Team Members from a Small Pool of Available Talent
If you don’t have time, then a choice must be made from a small group of candidates who are readily available – maybe 5 or 10. What are the chances of an “A” player being a member of such a small sample?
- Extending the Interview/Selection Process Over Too Long a Time Frame
Again, if time is short then the candidates who are selected for consideration (from a small pool remember) may be interviewed as time is available. Maybe one tomorrow, one next week and then one the week after that. By the time of the third interview, it is difficult to remember how that person compares to the person interviewed a couple of weeks earlier. As time goes on, in a competitive market, will it be the “A” player or the “C” player who is still available?
What is our solution to these problems? We don’t involve the client in the process until we have built a pool of dozens, if not hundreds, of potential candidates. The odds are that many more “A”s will be among them then a sample size of 5-10. Then, we filter the list down to the best 4 candidates and look after the scheduling to make it easy for our client to meet them all within 48 hours.
As a result, it is likely that the client will only be meeting with “A” players and can easily compare each to the others due to the compressed time frame. If an offer is to be made, it is highly likely that the chosen candidate will still be available.
By repeating this effective hiring process over and over again, an effective leader can build a team of champions and do it in a very efficient manner.
All About Going
When an owner realizes that it is time for a new stage in life and time to realize the value of the business that has been built up over many years of hard work, then it is best to approach that event in a logical and organized manner. It is still critical to continue to acquire top-ranked players for every position on the team by following the process described above.
If anything, the need to develop the team is even more pronounced, as the business will have the highest value if virtually all operational responsibilities have been delegated by the owner to the senior team members. Ideally, the owner should maintain only the most strategic oversight responsibilities which can be easily transferred to a new owner.
The highest value will be obtained by organizing the business in advance to separate the owner’s involvement as described above, by clearing complexities and anomalies from the financial records and by upgrading the physical plant and equipment at least cosmetically. Where possible, several years of advance planning and effort will result in a financial perspective that demonstrates stability and growth and promises continued growth in the future.
A well-organized, confidential auction process conducted by a qualified mergers & acquisition specialist will market the business across a very wide array of potentially interested parties and will narrow the list of possible acquirors to only those who have a serious interest and have the financial capability to complete a purchase on acceptable terms. Such a process can take anywhere from 6 to 12 months.
During the time that the auction process is underway, it is critically important that the owner continues to spend 100% of his/her time running the business and maintaining the growth trajectory. There are many tragic stories of owners who mentally left the field before the game was over and suffered financially as a consequence. Often a Letter of Intent will be provided by a prospective purchaser, perhaps on very favourable terms, however, until the final agreement is signed, and a cheque has been presented, the game is not over.
Growing or Going?
Whatever path you are on, we can help. Quality team members are a must in either case.
If you are ready to move on to another stage of your life, we can help there too. We have many qualified professionals as part of our extended team, and we would love to work with you through the preparation stage to ensure that the highest possible value is achieved.
Kathbern Management is an executive search firm based in Toronto, helping companies find the executives and senior managers who not only have the experience and credentials to fulfill their responsibilities, but also have the emotional and “fit” requirements that will enable them to be successful in a particular environment. We simplify the process and, through our deep research, are able to bring more and better candidates forward than would ever be possible through a do-it-yourself passive advertising campaign.
Contact us today for a free consultation about your key person search.