Selling Takes a Back Burner
I was referred to a manufacturing business with over 100 employees. They were a leader in their field and at a crossroads. We met with the husband and wife who owned it and they explained their CEO wanted to buy the business but they weren’t sure he had the financial wherewithal. They also felt he was not maximizing profit to down keep down the price he would pay (margins had been decreasing).
The CEO also expressed interest in business ownership, whether his employer’s business or another one. This creates a sticky situation to say the least. When selling a business, you must disclose everything, good and bad. This includes telling buyers the CEO may leave. And leave he did, but not on his own volition. He was let go for cause! In addition, the HR director was gone, and the in-house accountant was retiring.
Action Items
This is called forced exit planning. Our focus changed from finding a buyer to getting the company ready for a buyer. What we did included:
- Conducting focus groups with a variety of employee groups.
- Interviewing the owners.
- Bringing in an interim CFO to get the accounting department in order.
- Arranging for an outsource HR firm to take over all the HR functions.
- Supervising the hiring of an interim CEO.
- Overseeing the recruitment of a permanent CEO.
- Counseling the owners.
- Keep the wheels on the tracks while all of this was going on.
You may be wondering why the owner didn’t take over the CEO role. He did in name but managing over 100 people wasn’t his strength. He was a product guy who loved tinkering with designs, machines, etc.
The Result
The interim CEO was fantastic, just what the company needed. He brought a steady hand to an almost-crisis situation. The employees were shaken and split in two camps. One group loved the former CEO and one group hated him (they said he played favorites).
His actions, plus the stability brought by the HR and CFO people allowed the company to move forward with very little disruption. The permanent CEO was (and is) a great fit.
The owners? With solid management they like and trust the thought of selling has gone away, even though they are both in their mid-70’s. Selling sounded great when things were rocky (and they were suspicious). The husband gets to tinker and be creative and the wife does her thing away from the business. They have a place in the desert and can spend more time there. A happy ending, even though they didn’t sell, and a built-in buyer with their new CEO.