Local business coach discusses ownership transitions
The life cycle for every business is different, and is generally dependent on the goals of its owner or ownership group. Some companies want to grow rapidly and try to cash out after building a successful foundation, others want to build a generational business which can be passed down for decades, and others still fall somewhere in between these two extremes.
No matter the size, structure or industry of a business, as long as it still intends to operate there will come a day when ownership must change hands. This can be done through the sale of the company to an outside buyer, categorized as an external transition of ownership, or it can be an internal transition in which an existing owner either buys out their partners or passes down their ownership stake upon their death or retirement.
In any case, maintaining operational efficiency and minimizing the effect on the business during an ownership transition is crucial to the business’s ability to continue to thrive under the new ownership structure.
I am a business coach who has the privilege of serving businesses of any size and industry in the Cincinnati, OH area. Through the years I have worked with business owners in West Chester, Sharonville and the entire area to help them reach their goals, and in many cases I have helped to oversee an ownership transition, both on the side of the person or group relinquishing ownership and on the side of the person or group taking over.
In this article, I will discuss some of the differences in internal and external transitions, and include some helpful pieces of advice for owners on either side of the equation which I have learned from my experience as a business coach.
Internal transitions typically have some of the framework for an ownership change in place beforehand. No matter if the company is a large organization or small enterprise, articles of organization made at the onset of the business typically outline what should happen if an owner or owners want to remove themselves from the business, want to retire and pass down their ownership or if the other partners want to buy them out. Since this language is already in place ahead of the time (in most cases), it helps the transition go smoother than some external purchases of companies.
External transitions can be more complex, as the two parties must come to an agreement on not only a price of the business, but a succession plan and a timeline on the transition. Sometimes, current ownership is asked to stay on for a period of time, or even permanently.
Another major difference in these two types of transitions is the expectation level for change. Usually in an internal transition, the company direction stays basically the same and existing personnel don’t have to worry about the security of their jobs. In an external transition, the new ownership group might want to completely change the company’s products or bring in their own employees.
In any period of change within a business, having a successful coach in your corner can help. If you are going through a transition or need any kind of business assistance, please feel free to give me a call today to book your initial consultation for more information.
