Ownership transition is all about trust, so develop leaders early and communicate clearly to ensure lasting success.
Having dealt with dozens of ownership transitions has made me realize how crucial trust is – especially if the firm is transitioning for the first time. The firm owner has never done this before, and it is a signal for new leadership to come into the picture. It is a sign that shows the firm is entering into a new lifecycle and is preparing for change down the road. That is why it can be nerve-racking.
Who do you make principal? How long must they have been in the firm? What is the criteria for ownership? How many shares should you sell? These are all valid and good questions, but in order to make an overwhelming process less stressful, you must first start with who. Who do you trust will effectively lead the future of your firm? That is the million-dollar question. If you have cultivated and developed the next generation of leaders in your company, you should have several options.
Even if there is a pool of able, competent individuals ready to take on ownership, there will still be that lingering sense of losing control of your firm. Even if you lose your controlling stake in the firm within the next decade, there is a feeling of your life’s work coming to an end. When you sell your controlling stake of the firm you will feel like you are giving away something that has been yours, but remember this: not giving up control at the right time to the right leaders is tough, but not as difficult as dying at your desk! What eases this feeling is the fact that you trust the people you are selling ownership to. These individuals have proved they are worthy of ownership and that they think and act like owners. Trust is cultivated by time and experiences.
Communication will be your ally throughout this process because your second tier must know that they could one day directly impact the future of the firm. It is essential that the high performers of your firm be made aware of the ownership opportunities. If they are unaware that they are being considered to be future owners, they may leave. Once you have communicated, the next step is to make the prospect of ownership attractive. Remember, you are selling a piece of your firm. It must be a worthwhile investment; if it isn’t, it will be a harder sell.
Taking your time in each of these steps will ensure everyone keeps a cool head. Rushing is one of the worst things you can do during an ownership transition. Giving this process the time it deserves allows you to think ahead enough to consider your people, your firm’s finances, and transition philosophy, but also gives you the opportunity to take steps right now to make your transition as seamless as possible.
The future is bright for the AEC industry! At least it should be if you have been consistently creating a culture that people want to work for, but most importantly, become an owner in.
Zweig Group has helped thousands of AEC firms build successful ownership transition strategies that preserve legacy, enable leadership succession, and align with long-term goals. Whether you’re just beginning to explore options or are ready to map out a comprehensive plan, our team can help you evaluate internal and external transition models, develop financial scenarios, and build a roadmap for your firm’s next chapter. Let us guide you through the unknowns of ownership transition with clarity, experience, and a proven framework for success. Learn more about Zweig Group’s ownership transition consulting services.
Ezequiel Tovar is a strategic planning consultant at Zweig Group. Contact him at etovar@zweiggroup.com.
