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.
- 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.