Realizing it’s time to say goodbye
t
Owners face difficult move when it comes to
handing over the reins to a different leader
here comes a point in every entrepreneur’s life
when they realize it’s time to sell their business, but
whether they act on that realization is another matter entirely.
Even though they may be nearing retirement or
perhaps have lost interest in the day-to-day operations of their business, getting them to actually follow through on the sale and give up the reins can
much easier be said than done. They created the
enterprise, gave it life, nurtured it and endured the
growing pains until it became a success. Cutting the
By Geoff Kirbyson
cord with something that has become a part of them
and indeed how they identify themselves, can be a
uniquely difficult task.
How can somebody else possibly run the company
as well as them? They’ve known every in and out
since day one and the company is a reflection of
them, their personality and their business expertise.
For many entrepreneurs, selling a business that
they started from scratch is akin to facing their own
mortality, says to Harry Black, managing partner of
Winnipeg-based F.H. Black & Company.
“That’s a hard thing to stare down. Most of us
are looking to the future, despite our age. We really
think and act as we always did as young people. It’s
a sensitive issue. We procrastinate on many things
and dealing with our death is one of the last things
on our list. It’s inevitable and it’s going to happen.
It’s a matter of coming up with a game plan.”
Sean Foran, Toronto-based managing director
of business transition planning for CIBC Private
Wealth Management, agrees. He says business own-
ers tend to be reluctant to come to grips with reality
because they don’t have a framework to approach
succession planning.
“It tends to be emotional and messy,” he says.
It can be difficult to focus on the succession issues
at hand because the company, the family and ownership are all interrelated. The key is focusing on
the business in isolation and understanding where
it is in the current landscape, the opportunities and
challenges it’s facing and deciding who is the best
person to take the wheel and guide the firm to the
next level.
“It should be about maximizing the value of the
business going forward. If they can be objective
about the business and its leadership needs, that’s
the starting point,” Foran says.
In many companies, it will be assumed by both
employees and the founder’s children that the latter are the obvious choice to lead the company into
the future but an increasing number of families are
opting to bring in professional managers to run the
show, Foran says. This is often seen as the ideal way
to simultaneously unlock the value of the company
and keep ownership in the family.
“The owners of family businesses need to think
who is going to be the most effective manager of
the assets. Very rarely is it the kids. It’s very rare
that they’ll possess the same drive and talent as the
founders,” he says.
In fact, Foran says, in many cases the kids make
that decision themselves.
“The children have watched mom and dad come
home (from work), day in and day out, and in many
ways, the business represented their competition for
their parents’ attention. So, the kids don’t have the
same positive view of the business that the parents
do,” he says.
