• Author Chris Hadjiyianni
  • Year Date 2017
  • Location Waterloo
  • Category Business

Introduction

As business owners plan to exit their businesses, they must confront the challenge of incentivizing employees—specifically, management—to stay with the company after they have left. Having a strong, established, and committed management team to take the reins once an owner has exited is becoming more of a prerequisite than a luxury when selling or transferring the business to a third party. There are several reasons why a strong management team is essential to a successful business exit for owners.

  • Before they can sell or exit their businesses with financial security, most owners need to grow their companies’ cash flow and transferable value significantly. Without management leading the charge, this can be a monumentally difficult task.
  • Few sophisticated buyers will seriously consider acquiring a company without a capable management team that remains with the company after the owner exits.
  • More than one-third of business owners plan to sell or transfer their businesses to management, based on The BEI 2016 Business Owner Survey.
  • Transferring a business to children is especially risky without key employees who will remain with the new ownership.

Each of these observations highlights your need for motivated employees to grow business value and stay with your company after you leave. This white paper describes how you can incentivize key employees to do just that.