Introduction to the series on Exit planning Strategies

Every business owner will have to face at a point of time the transition of ownership and the succession of management of his/ her business. This is the most difficult challenges that they will ever encounter.  Business owners have devoted their lives to their business and suddenly they have to decide what will become of the organisation, and what will be the return on what is likely their most valuable financial asset.

Our expertise advising business owners to exit their business has demonstrated that it is an area in which they are poorly prepared. The critical—and complex—decisions they will be confronted with in this process occur only once in a lifetime. They have no idea of the monumental task surrounding their exit.

Should the business be sold? When should it be sold? How is the business to be valued?

Should there be an outright sale?  Should it be sold to a minority interest?  Should  the business envisage an IPO? Transfer the business to employees?  Transfer the business to family members? Should it be recapitalised?

Very often goals of seller and buyer are divergent; the tax, funding and legal implications of the transaction can make a great difference on the net proceed of the deal. All these complex choices can quickly become provoking.

We hope that this series will help business owners in the development and execution of an effective exit strategy.We will explore: 

• How to develop an effective exit strategy—setting the appropriate objectives and understanding the importance of effective and early planning

• How to transfer the business to get the optimum outcome: what are the different types of buyers? What is the buyer’s agenda? Is it better to sell to a capital venture or a strategic buyer?  Should the owner keep managing the business while transitioning? Should the owner keep control for a while? What should be the appropriate transaction structure?  How can buyer and seller objectives be reconciled?

• How to prepare the Business for Sale:  How is the business valued? When is a good time to sell? Before selling what corrective actions should a business owner initiate to enhance the value of the business? How to prepare for a smooth due diligence process? How to preserve employee interest in the transaction?

• What Processes should be in place:  to manage smoothly the due diligence, make sure that advisors are effectively coordinated, conduct efficient negotiations and get satisfactory closing, avoid pitfalls and optimise taxes.

If you envisage totransition out of your business in the near future and would want to explore what you should do please do not hesitate to call Jean-Bertrand de Lartigue on +44 1656 766 363 or e- mail him at JB@macint.co.uk

Would you want to sell your business at its maximum Value?

What would a potential  buyer look for?

Personal Factors

1. Motivation of the Owner(s)  

    

Any potential buyer will be interested in the motive for the owners of the business to sell.They will be interested in what has brought the owners to this point?  Buying and selling a business is a very emotive decision and any buyer will want to know that the seller is committed to the sale and he or she has gone through a process to establish their decision. They will be asking themselves whether the owner has a specific plan in place regarding what he or she will do after exiting the business. Buyers will be concerned that a lack of a plan may indicate that the owner is not committed to exiting and that the owner may change his/her mind just before closing. 

Most businesses do not have any kind of exit or succession plan normally because they’re not sure exactly how to start the process or whom to call for help.  They may have difficulty discussing financial matters and personal goals without others (or outsiders) because it is too private, somehow unpleasant, or considered taboo.

Business owners often spend all their time “putting out fires” and do not have the time to focus on long-term planning; the entire process seems too daunting. It may be that business owners do nothing because they’re afraid of what life without their business would be like.

If the business owner does have an exit plan in place then often they have focused on just one or two elements of a succession plan, such as an estate plan or management succession, and have ignored other equally important areas.  This situation usually results in business owners, making poor decisions, are not achieving all of their personal and business goals in the process and not being able to provide the buyer with sufficient or accurate information.

The exit planning process involves helping business owners wrestle with several issues, including their fear of letting go, their desire to avoid the stress and conflict it may cause and not knowing when they need to start. 

This article is starting a series of articles about what factors buyers of businesses look for to help you enhance the value of your business, if you have decided to exit the business in the next 3 to 5 years. If you need help and would want to discuss further you can call Bob Jones on +44 844 873 623 or e-mail him at bob.jones@exit-planning.co.uk

Factor 5 to keep high morale in your business, is to encourage creativity and innovation

Encourage creativity and innovations through wisdom networks

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In their book “Wisdom Network” Melissa Giovagnolli and Steve Benton describe the challenge companies have to use visible and invisible knowledge to achieve their goals. The problem is that people are reluctant to share their knowledge, they only talk about what they know to a close circle of people in their department / function because they are afraid that if they share their “secrets with others they will lose their value to the company. In order to overcome this issue you have to create an environment that gives your employees the possibility and the confidence to share knowledge and ultimately co create to innovate.

It is proving to be effective to remove formal structure and the restraints of job titles and to think of the individuals’ skills and how they can add value to projects. Employees are assessed on primary and secondary skills and put into ‘Resource Pools' which group people by skills which can be used by the company.

For example – ‘Employee A' can have a primary skill in Project Management but have a secondary skill in IT. They are added to the Project Management resource pool at a high level and the IT resource pool at lower level. When a business project comes up requiring their skills they are allocated to a project's ‘Job Family' requiring their primary skill and they can volunteer if they have free work time to be a part of another project's ‘Job Family' using their secondary skill in order to improve their knowledge and experience. A Job Family being a group of people with the required skills between them to complete the project.

So ‘Employee A' can perform their main skill, develop their secondary skill or be utilised to do both at once see the project examples below:

Project A Job Family A delivery project		Project B Job Family An IT product project		Project C Job Family IT delivery project
Senior Project Manager (Allocated)		Senior Product Manager		Senior Project Manager
Project Manager		Product IT Manager		IT Project Manager (Volunteer)
Project Administrator		IT Technician (Volunteer)		IT Project Administrator

By recognising that a person is more than their job title company's can ensure value is added, skills are developed knowledge shared, creativity developed and innovation is the rule of the game.

Each team / project will

• define their own roles and responsibilities
• define Short terms and long terms goals
• be encouraged to explore new ideas and push the edge of the envelope 
• have members constantly crossing boundaries and exploring new concepts

This fluid model is ensuring an employee is working productively for every hour they are at work, if they are not performing their main skill they can be developing their secondary skill and further assisting a business needing that resource. By being able to move around an organisation morale and recognition is increased, as well as offering a challenge and allowing the employee to understand more of the business as a whole. If an employee does not know the company as a whole they cannot be expected to proactively contribute to its success.

Employees that have the ability to self-develop are eager to stay within the company, as they enjoy themselves, learning new skills. They are loyal to the brand and are “walking advertisements” for the company, attracting new talents and clients. Theyshare knowledge with their co-workers as they know that others will share with them. They will serve the existing clients better and get their loyalty. Happy and satisfied customers will talk to their friends, colleagues and suppliers and will bring you new clients so your profit will increase!

In this series we have talked about the  top 5 factors contributing to keep high morale in an organisation to generate succes. Success appeal success and produce high morale. The top 5 factors that allow you to create an environment for success and keep high morale in your business are:

1) The organization needs to be strategically aligned

2) Good Leadership is essential to the morale of the troops

3) Motivate its employees

4) Establish a process to help people meet performance goals

5) Encourage creativity and innovations through wisdom networks

If you want to discuss any of the above points or need help to implement this magic environment, please feel free to contact JB de Lartigue at jb@macint.co.uk or call me on +44 1656 766 363

Top 5 factors to keep high morale in your business

Factor 4 Establish a process to help people meet performance goals.

Business is becoming increasingly complex. Customer expectations are higher and higher, you need your employees to be able to change their knowledge and skills quickly and raise their performance "bar". Leading edge organisations are re-thinking their philosophies and human resources strategies to align their employees' performance goals with their organisational vision, values, and strategic plans. These leading edge organisations are evolving from a single "overall" rating appraisal system, to one evaluating their people's profiles of strengths and needs for developmental areas. They focus on developing people behaviours/skills, introducing multi-source feedback systems and re-examining the mechanism for pay linkage, in other words they embrace the performance leadership programme principles based on

• Applying continuous improvement to individual and team performance

• Aligning individual efforts with business needs

• Conducting real dialogues between the employee and his/her manager, not just processing a form

• Defining common framework and measurement criteria for all employees

• Looking at results and behaviours of people to deliver high performances, it is not about measuring personality trait

• Maximising job fit and defining shared responsibility to avoid overlaps

• Focusing their employees on their current job requirements to deliver the expected results.

Your employees will feel being valued and adequately rewarded. They will understand what is expected from them both in terms of business performances and behaviours and they will serve your customers with enthusiasm, as they will be highly motivated. All the above will lead to:

• High customer satisfaction and loyalty so your customers  will buy more from you and your profit will increase

• Your existing customers will be your best advocate and will recommend you to friends and you will get new customers increasing your sales and profit even more.

I will explore the 5th and last  factor on how to keep high morale in your organization:

"Encourage creativity and innovations through wisdom networks"

on October 20th 2011.

In the meantime if you would  like to discuss any of the above points please feel free to contact me at jb@macint,co.uk or call me on +44 1656 766 363 .

Top 5 factors to keep high morale in your business,

Factor 3: Motivate your Employees

it is important for the success of an organisation to motivate its employees to use their full talents. It’s worth considering your company’s strategy and approach to motivation: getting this right and having positive motivation philosophy and practice in place leads to improved productivity, quality and service. There are many businesses out there feeling cash-strapped and this should not be seen as a barrier. I will focus on  aspects of motivation other than those related to salary enhancements.

Being Valued

Top of the list in terms of motivating factors is “being valued”. Explain, in an appropriate fashion to the employee, how to go about their job. Spell out to them what your expectations are; it doesn’t offend to say what you are expecting of them. With these enablers in place, when they then deliver, don’t hesitate to thank them. Even better, do this in front of others; it’ll make others strive to do a good job too and receive their praise in turn. Feedback on performance regularly, and keep people challenged (but not overloaded and stressed). It also helps if individuals’ roles are set in the context of the company objectives, strategies and plans and employees can see how what they are doing fits in to the bigger picture. People are self-confident when they are feeling valued. Finding the right balance of confidence is difficult, too little nothing happens: too much leads to arrogance and and inevitably to poor decisions. Without great levels of self-belief, the pillar of confidence, your employees will not take risks or try new things. You can’t have confident organizations without confident individuals inside them

Explore Potential

Give people the potential to develop their skills outside their core competency. Consider the skill sets engineers, marketers, accountants etc need to perform well in their field, that these are transferable skills, which could be applied to, and honed in, another function, and you’ll create a flat-lattice organisation without the chains of command or predetermined channels of communication that are features of pyramidal management.  In those organisations there are no bosses, but leaders. Associates choose to follow leaders rather than having bosses assigned to them. They commit to projects, accepted and prioritised by the board of directors, of their own choice rather than having tasks delegated to them. Performance reviews are based on a peer-level rating system. Staff are mentored and supported in their development so they have a good understanding of the organisation, and how they can contribute to its success. Contribution to success is about how  your employees perform, so it means  having clear goals, moving positively towards them, talking about issues that might prevent them meeting their objectives and feeling heard when they do so. They do all this best when they feel appreciated and valued by their leaders and their colleagues. So it’s not just about delivering: it’s about doing that within collaborative working relationships too.

Fulfil Ambitions

The opportunity of giving an employee a secondary responsible role - is also a way of supporting them to fulfil their career ambitions. It equips them with more widely practised skills and experience which will stand them in good stead when an opportunity becomes available. A promising employee who is effectively blocked in their promotional scope by your own presence could find this seeming lack of prospects demotivating. As a way of keeping your people motivated, and also as a method of effective succession planning, consider a sidewards move for them within the organisation, or even a secondment to a valued supplier or customer. Your employees should be convinced that they have a future within the organization. Conviction is a short-term motivation factor both in good times and bad. It will keep your employees going even when things get tough, they will maintain their energy, motivation and resources they will feel good and will be resilient, efficient and effective. To have conviction your employees would need to trust you and the organization so avoid promising things you know you won’t be able to deliver!

Achieve Success

The goals you set your employees should be challenging and stretching, and they need the support and resources in place to achieve them. Consider what difference new software, machinery, guidance from yourself, help from a colleague, support in prioritising, agreement to home working etc could make to whether an employee believed their goals to be achievable or otherwise. Think how clearly you deal with a supplier: you specify how and when you want a product or service to be delivered, using tools such as specifications to support this. Your suppliers know what is expected of them and commit to deliver against this. Treat your employees likewise. Commitment matters because it is why your employees do the work you expect them to do. When your employees commit to a goal they are perceive that they are  doing something worthwhile, they demonstrate strong intrinsic interest in their job and feel that the vision of the organization resonates with their purpose.

the iOpener Institute for People and Performance, research, involving 9,000 people from around the world, reveals some astonishing findings. Employees who report being “happy” and motivated at work:

•     Stay twice as long in their jobs as their least happy colleagues 
•     Spend double their time at work focused on what they are       paid to do 
•     Take ten times less sick leave 
•     Believe they are achieving their potential twice as much

Employees experimenting the "feel good factor" will solve problems faster, be more creative, adapt fastest to change. Customer service will be excellent, your clients will be loyal and recommend your products / services to their friends and business acquaintances so your bottom line will increase!

I will explore factor 4 on how to keep high morale in your organization:

"Establish a process to help people meet performance goal" , in my next post on October 6 2011.

In the meantime if you’d like to discuss any of the above points please feel free to contact me at jb@macint,co.uk or call me on +44 1656 766 363