Having completed dozens of private company transfers of all types, one thing we can say is that no two are alike. Each has different complexities, structures, and goals, which leads to different transfer strategies. However, the most successful transitions tend to have one thing in common and it is often the most significant factor – an owner who was ready.
Owner emotional readiness is one of the toughest issues to work through in a private company transition and it is usually the major obstacle to moving forward. While it is difficult to face, owners have to remember that the clock is ticking and there will be a transfer of their role at some point – one way or another. Addressing it is important for the owner, their family, and the company’s employees because when transitions happen in an unplanned way, it usually leads to major problems.
This issue first arrived on my radar several years ago when I was asked to speak to a group of owners about transitions. To my surprise, the major question that they wanted to address was not how to conduct the transaction, but what they were supposed to do after the fact.
If you are an owner reading this and you are struggling with this issue, the important takeaway is that you are not alone. Very few owners, in my experience, gain clarity around this issue easily or quickly. Part of the reason is that it is uncomfortable for the typical Type A entrepreneur and owner to identify with and engage in emotional topics. So, know that the struggle is real and it affects everyone. However, that does not mean you shouldn’t continue to work through the challenge, because not addressing it will likely cause you to make bad decisions in your transition which will negatively affect others.
While there are many complex issues at work here, we find that the biggest challenge for many owners is the identity crisis that results from the idea that they will no longer be a part of their business. Over time, their role as a leader and owner of the company has become a part of who they are. Because the business was so hard to build and requires such a personal commitment, many owners have trouble envisioning life without a role in it.
I wish I could offer a specific solution to the problem (i.e., take up woodworking!) but it is just not that simple. What I can tell you is that ignoring the situation because it is hard to think about is a mistake. I can also offer some suggestions based on my experience of working with others who have navigated this terrain.
- Work consistently over time with an outside advisor who can provide you with perspective. A good advisor will not have your bias, and can provide objective guidance to help you see things you cannot on your own.
- Talk to others who have taken this journey and learn from their experiences and mistakes. Based on what I have seen, most owners will share their experience freely.
- Think about a transition strategy that allows you to step out of your role gradually, rather than falling off a cliff. Changing your leadership role before you begin the transition, rather than waiting until you get to the point that it must happen all at once, will help the process feel less daunting for you as well as for your employees.
- Another benefit of gradually changing your leadership role is that it will free up some of your time to begin exploring interests outside of the company. My experience with others who have gone through this process is that you will do a lot of experimenting before you find the things that are a good fit for you.
Last June we conducted a private company transition conference that included a panel on the CEO’s Life After the Transition, where several owners who have gone through the process talked about their experiences. You can watch the video of the panel discussion here.
There a lot of great lessons in this video, but the most important is that an owner’s transition is an active process that requires engagement to discover what works and what doesn’t. The owners you’ll see in the video all did it their own way, and they all experienced things that did not work well and had to keep adjusting their course. For them, just getting started with the process seemed to be the biggest step. Had they waited until everything was perfectly clear, they likely would never have started.
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