Succession Secrets

I had coffee this morning with a successful entrepreneur, who recently went through a sales process with a private equity group, only to see the deal go up in smoke in the 11th hour. Perhaps surprisingly, my CEO friend decided to keep the business and make it even better and even embark on an acquisition spree that the private equity group wanted to lead.

Tune into today’s show about how entrepreneurs view their business, what they like and hate about it and how it influences their decision whether to sell or keep it.

 

Your succession is success!

People tend to look to their peers for ideas. Especially their industry peers, as they assume that the best of them have become successful by having developed best practices.  In reality, there is an infinite potential for new ideas, however, advanced the industry.  And the easiest place to find good ideas that work is t look at other industries.  By travelling outside your industry, you can pick up well-tested ideas that no one is using in your market.  You have the chance to become an industry innovator and leader just by copying these ideas.

In today's Succession Secrets show, I explore this concept popularized by famed marketing guru, Jay Abraham.  Examples include cloud software companies that have copied utilities, multi-family apartment rental businesses that have adopted pricing practices from the airline industry and FEDEX, which emulated the hub-and-spoke system of the Federal Reserves to invent overnight shipping.

Listen to today’s episode to find out about the marketing techniques I imported into investment banking and how a CEO peer group is the most fertile ground for cross-industry “idea-pollenization”.  Listen to how an “old-economy”, dirty and unattractive business was repositioned by my Vistage group into a green, higher purpose business, ripe to attract millennial talent.

Listen to the show, or read the transcripts at http://entrepcoaches.com/podcast.  

Your succession is success!

When I was a kid, my dad used to tell me “don’t try to ride two horses with one a*s”.  Recently I have noticed that I am trying to ride not just two, but four horses. (Not mentioning my personal life, which is probably is at least another horse or two).  

My horses are coaching groups and individuals, publishing my daily Succession Secrets podcast show, gearing up to become a public speaker and growing my coaching business.  I feel I should prioritize, but I have no heart to kick out any of the horses from under me.

I called my father to try to make sense of this conundrum, who further confused me with another proverb, he had heard from his boss as a young MD and researcher: “To be successful, you have to swallow it all”. I.e., he had to treat his patients, write his doctorate, carry out research and teach at the university, if he was to become a top heart specialist.

Was my dad talking from both side of his mouth?

Read the show transcripts on http://entrepcoaches.com.

Your succession is success!

When I was a kid, my dad used to tell me “don’t try to ride two horses with one a*s”.  Recently I have noticed that I am trying to ride not just two, but four horses. (Not mentioning my personal life, which is probably is at least another horse or two).  

My horses are coaching groups and individuals, publishing my daily Succession Secrets podcast show, gearing up to become a public speaker and growing my coaching business.  I feel I should prioritize, but I have no heart to kick out any of the horses from under me.

I called my father to try to make sense of this conundrum, who further confused me with another proverb, he had heard from his boss as a young MD and researcher: “To be successful, you have to swallow it all”. I.e., he had to treat his patients, write his doctorate, carry out research and teach at the university, if he was to become a top heart specialist.

Was my dad talking from both side of his mouth?

Read the show transcripts on http://entrepcoaches.com.

Your succession is success!

I recently bumped into a fund manager friend, whom I will call Bill. He told me that people don’t appreciate anymore the “buy-and-hold-forever” philosophy of his fund.

I inquired about an example when they did appreciate that in the past. He mentioned about the exiting owner of a contracting company, which chose his fund over a competing strategic buyer, as they offered a “long term future” for his employees. (On further inquiry, it turned out that the seller cheated key staff members out of their exit bonus, after closing – hardly a sign of concern for the welfare of these employees.)

So why is the GOOD reason for the sale, not necessary the REAL reason, and why is it important to find out? Furthermore, what will be Bill’s real differentiator, if “buy-and –hold-forever” has fizzled out?

Tune into the show to find out. Search for “Succession Secrets” on iTunes or the Podbean app.

Your succession is success!

I identified 5 major variables to the succession decision. Today’s episode is about discussing these.

The first variable is the trigger. There are three triggers to transition, including (1) a compelling alternative future for the business owner / leader (another career, post-entrepreneurial pursuits, etc.); (2) her potential inability to continue running the business (ill health, unsustainable/loss making business); and (3) a potential case of burnout (able to continue, but no more steam in the engine).

The next variable is whether the leader can afford to exit. Can he retire? Does he have an alternative income opportunity? Is the business sellable?

The third variable is whether the business is ready to be transitioned. It may not be able to carry the cost of new management. The successor(s) may or may not be ready to take over. Is know-how of the business institutionalized (“processized”, documented)?

The fourth variable is whether the business owner or leader can secure her net worth locked up in the business. 

The final variable is the businesses ability to innovate without the existing leader.

Tune into the show to learn the details of these variables driving succession!

Your succession is success!

 

Visit Us: entrepcoaches.com

Today I am answering Mark’s question from Henrico, VA. Business owners often grapple with the dilemma whether to promote an existing employee or business partner or bring someone from outside to succeed them.

Surprise, surprise… it depends.

Some of the variables are the type of culture the business have, the sensitivity of staff members to a transition, the time needed to groom a successor, any skill gaps the company have and the potential for an outside successor to bring a book or business or open a new market and the plans of the owner to cash out of the company at the time of the succession transition or shortly thereafter.

One thing is certain. A successor is necessary in most cases for a reasonable chance of doing a liquidity transaction with a third party.

Tune into the show for the details. Thanks for listening to the show!

Your succession is success!

In my experience as an investment banker, business owners often did not understand how to negotiate the sale of their business. Many of them thought that negotiation is about pressuring people to give up most of their upside to make the transaction sweeter for them. This is the so called win-lose strategy. It can work in situations where one party holds all the cards and the other is forced to deal, such as in near-bankruptcy cases.

In most M&A deals however, the parties will not do a transaction at any price, unless it benefits them. In these cases a win-win strategy is more appropriate, where both parties needs and constraints are recognized.

In today’s episode I discuss the critical elements to negotiating an advantageous deal for your team, by understanding the needs of the other party and helping them get what they want. I also talk about why proposals must be based on logic and how to avoid making one that terminates discussions at the outset.

Tune into the Succession Secrets show and if you enjoy it, please review it on iTunes.

Your succession is success!

I would like to share with you a simple recipe that I used to generate revenue and kick-start my business when times were bleak.  It is about setting a target, reverse engineering the input actions required to reach that target and to execute those actions.

It’s easier said than done, as an entrepreneur is faced with constant distractions from the outside as well as from her own curious and excitement seeking mind. It is all too easy to be seduced by the next shiny object of an idea. 

On today’s show I make the case against creativity and ideas. They are important, but at times of emergency, they can be counterproductive.

Tune in to listen to what happened to my investment banking business when we got closed out of our market overnight. How we scrambled to stay in business and rebuild our project portfolio, so that we could stay afloat and give ourselves a chance to return to profitability.

Thanks for listening and if you enjoy the show, please review and rate us on iTunes. It helps us get higher in the rankings and reach a bigger audience.

If you have an iPhone, search for “Succession Secrets” and click on the big icon and then on “review”. If you have already subscribed to the podcast, you will have to search for “Succession Secrets” for the podcast to come up.

On the desktop, link to: https://itunes.apple.com/us/podcast/succession-secrets/id1115741201?mt=2 and click “View in iTunes”, and there click: “Ratings and Reviews” under the title.

Be sure to choose a nickname which is likely uncommon, otherwise, your review will get deleted and you will have to swear and start over.

Thanks a lot for supporting the show!

Succession Steve

Did you ever waver whether to be “tough” with people when they did not perform to your expectations? Worrying that they would leave and you might have to pick up their tasks and look for new employees who might not end up any better?

In today’s show I make the case for setting boundaries and high expectation for people.  How to be tough on them, still keep them and turn them into high performers.  How to dangle the carrot too so that they have a reason to stay beyond the pay check.

I share the story of a former colleague and a good friend Peter, whom I was tough with early on his career and he ended up becoming a stellar performer and when we parted ways he became a venture-backed entrepreneur.

Thanks for listening and please review or rate us on iTunes.

Your succession is success.