The hidden value in your management team


There is no doubt that leadership and management in any organization is critical to building business value, but did you know that it’s also a focus of most consultancy buyers’ due diligence when considering a purchase?

On a recent webinar, Equiteq Chairman Paul Collins answered questions on why management quality is important to consultancy buyers and investors.

  1. How do you manage the potential conflict of building the profiles and skills of managers to attract a buyer when these managers may want to leave after a sale?

The focus of buyers during due diligence is on the top two levels of leadership in the business – the board leadership and the business unit leadership. Managers at this level are often required to stay with the new firm for a period after sale.

If your managers are intrinsically involved in every significant operational activity, then a buyer would be reluctant to see them exit. But if a manager’s responsibility is easily transferable, then there is a greater chance of a buyer allowing a manager to move on.

If you’re a business owner who wants to exit immediately after selling, rather than staying in the business during an earn-out period, you need to make yourself superfluous to the day-to-day running of the business before entering into the sale process.

Not sure about what an earn-out is? Here’s our blog on the 10 critical success factors for earn-outs: part 1.

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