I was recently asked to come into an organization because they were looking to perpetuate the asset to the next generation of family members. I had no prior knowledge of the business or family dynamics. That is not necessarily uncommon but is always a critical part of determining if JKL Associates can bring the proper value to the opportunity or if the prospect would be better served by an alternate provider.
Yes, we are very disciplined about our “Purpose” and invest time in determining – is the potential relationship rooted in authentic contribution by all parties such that there is significant opportunity to deliver the promises of our services.
During the initial conversation or should I say interview – they were interviewing me, and I was interviewing them. Many topics were discussed. Their initial focus was on our process to put strategies and tactics in place for a timely and smooth transition. All really important aspects to consider and definitely have in place for a strong exit strategy. I was trying to get a fuller appreciation for the current owners’ expectations of not just the transition of the asset but also the present state of the organization. Where were the mindsets of the generations involved.
Having been invited into many family businesses transitions, there is more to the process than just the paperwork to identify elements like who is acquiring what stock or assets at what value and who is restricted from doing what in the future etc. At the core of a family business transition is “FAMILY” culture.
As the conversation continued between the current owners of the business and JKL Associates, it became more apparent that the prospective client was looking for a resource to help them navigate some broken family culture through the sale of the business. There was an impression forming that the current business owners were looking for the “Exit Strategy Consultant” to be the go between for fixing or delivering the bad news about the future direction of the company. Thus sparing the current owners the grief of telling the next generation who was going to be the lead executive for the business and potentially letting the consultant be the fall guy. Needless to say, these types of arrangements never end up with all parties being open and supportive in the transition process. JKL Associates politely excused ourselves from the opportunity. We would rather bring respectful value and authentic results to our clients than masquerade for a financial payout.
This week as you look at your business, you may not be at the point of perpetuation planning, but it needs to start a lot sooner than most leaders give it consideration. Plan on 3-5 years of runway to do it right especially if doing it internally with family or employees. Yes, the paperwork is important but the events leading up to the transition are rooted in the culture of the business. If the culture is bankrupt, then the business might have a current good profit line at the time of the sale but it will not withstand the chaos of the leadership transition thus placing the entire perpetuation at risk.
If you are beginning to think about building your asset for a positive transition in the future, now is the time to engage a “Promise Guide” to help you navigate to a best outcome. Give JKL Associates a call at MI – (313) 527-7945 or FL (407) 984-7246.