There are nine reasons why selling your firm to the right buyer can strengthen opportunities, stability, and growth for your people.
In this business – the AEC business – there are still many firm principals who believe that selling their business to an external buyer is a cop-out. They believe that anything other than an internal sale is somehow the wrong thing to do for their people.
There is no doubt that pop culture portrays the management of every company that buys another company as stupid, evil, and bad. Watch ANY movie or TV show where a business is sold – or read any novel with a business sale as part of the plot – and I challenge you to find a single example where it was a positive event. So how can you blame people who haven’t had any experience buying or selling businesses for thinking it would be bad for their employees?
That said, I disagree with this conventional wisdom. I think that many times a firm sale could be the BEST thing you can do for your people, not the worst. Here are nine reasons why I think so:
- The buyer may make your business more successful than you have, and that may create opportunities for your employees to earn more money. In general, larger companies pay better salaries for any specific role than smaller ones do (for the same role). And in general, higher profits result in bigger bonuses.
- Your employees may have new job opportunities in different parts or places of the buying company’s business. They could have offices in other locations. They could have disciplines or specialty service areas that your business doesn’t have. All of these things could create more options for your people.
- Your employees may have better employment benefits than they currently have. Bigger companies usually have better benefits. More financially successful businesses typically have better benefits.
- Your employees may have a chance to get ownership in the acquiring company’s business whereas they haven’t had that chance to become an owner in your business. The buying company could be publicly-traded. Or they may have an ESOP. Or they may simply have widespread ownership while your firm is just owned by you or you and a few partners.
- Your employees may get to work on different types of projects or larger/more complex projects than they can in your business. Odds are, the buying company will be able to offer better projects to your people than you can.
- Your employees – especially management and key employees – may get employment agreements and/or retention bonuses if they stay so long with the new company – something they don’t currently have. This could give your best people a chance to get ahead.
- Your employees may get better technology from the buying company than they have at present. A bigger company means more resources. They may be a able to afford hardware and software you have only been able to dream about. This could be a benefit to your people.
- The management of the buying company may be more motivated to grow and succeed than you are at this point in time, and that in itself could create more opportunities for your people. This may be the elephant in the room here. And you know it’s true.
- You may simply need to get out of the business for mental and physical health reasons. You are not just the owner – you’re an employee, too. Odds are you have lived a lifetime of stress and made plenty of sacrifices for the benefit of your business. Maybe you don’t want your entire retirement to be dependent on your successors being sufficiently competent to run the business well enough to pay you off? And maybe you don’t think your people will be better off if your internal successors are running the business and they are saddled with the debt to pay you off? These could be reasonable concerns.
The bottom line? Selling your business could be anything other than a cop-out!
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Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. |