You are an entrepreneur who has worked tirelessly to build a successful company, and the day has come when you are about to make the big decision to sell.
For the successful owners that I have met with and worked with, it is a bittersweet moment. Of course there is the excitement of new partnerships, as well as the thrill of getting the “number” you feel you deserve for all those years of exceptional work, and the pride of the imagined future of seeing your legacy go beyond you.
Nevertheless, there is one area that is often overlooked by business owners about to sell: the relinquishing of control and decision rights.
Our identity as business owner — the one who has called the shots for so many years — never seems quite ready for the jump from head honcho to part of the team. With this new reality, the level of collaboration increases 10-fold, the integration of new systems and processes feels endless, and before you know it you’re wondering if you’ve made the biggest mistake of your life.
The truth is no one prepared you for this level of change. Throughout the diligence process, it was clear that some things would need to change, but those seemed like minor details at the time. Couple this with the excitement of the deal and the promised greatness to come from this collaboration, and it doesn’t take long to see how we can get hooked in our naivety. Throw in all the other things that arise like the resignation of key people you have worked with for years, or addressing cost synergy that may also involve the removal of entire departments, and again, the rosy view of the sale quickly becomes bleak.
If you are selling your business and decide to stay working in it, you must be willing to give up control and to be prepared for a change in decision-rights.
As a leadership coach and cultural integration expert, this is one of (if not the most) common challenges I encounter. While the world of mergers and acquisitions continues to point to the lack of cultural alignment as the main reason for lower-than-expected revenue generation, the necessity of this identity shift by the former owner is rarely discussed.
This doesn’t mean that there isn’t collaboration. You will have a new business partner who wants the business to do well. That is the greatest place of alignment. However, how the business will go about doing this and who will decide will be a big change for you.
Here is what I mean by decision-rights:
Leader decides: The leader of the organization, group, or task force decides.
Leader with input: Same as above with input from others on the team.
Sub-group decides: A group is assigned to make the decision.
Sub-group with input: Same as above and the group may solicit input from others not directly involved in the group.
Majority vote: At least 51% of the group chooses the decision by a vote.
Consensus with fallback: No one in the group opposes the decision, and a fallback decision-right is designed if the group cannot reach consensus within a pre-defined timeframe.
Alignment: Everyone is FOR the decision and in “alignment.” This takes the longest amount of time to achieve.