Exiting Your Business
Project Managing Our Exit Strategy
A great deal of emphasis is placed on the preparation phase. It was during this time that we considered our four options for the sale:
Passing the company on to family
A management buyout
A trade sale
Neither of our children were involved in the Company, and they had in any case chosen other paths. A Management Buyout would have left our managers at the mercy of Venture Capitalists – and we didn’t like the idea of any ‘dragons’ getting their hands on our Company. We were approached by a competitor interested in acquisition, but a Trade Sale would have involved surrendering our legacy to others who would probably not value it. And there was a high chance a trade purchaser would take our intellectual property for capitalisation elsewhere and dispense with our people. So, by process of elimination, we came to Employee Ownership.
It was clear to us that LEGACY was a key driver in our exit planning, in addition to EMPLOYMENT SECURITY for our people. Employee ownership was the only model that allowed us to leave a meaningful legacy while providing employment security and some income for the next phase of our lives.
Once we had decided upon Employee Ownership the preparation phase started in earnest.
The Next Step
The next step was to find out more about employee ownership. This was achieved by attending the Employee Ownership Association (EOA) annual conference. It was here I learnt of the pitfalls of not preparing well, and of the benefits of employee ownership that come with successful implementation. I listened to examples of where the news of the sale to employees was met with suspicion, worry and confusion. I was therefore determined to do everything in my power to ensure that the transition would ‘land’ well. For this to happen I had to form a project team. At this point, there were 3 members in the team – James Shand (our FD) covering the financial aspects, Peter (my husband and the founder of the business) as a key stakeholder and myself (the Managing Director) as project leader.
The EOA conference gave us access to consultants and advisors specialising in the organisational and legal aspects of employee ownership. We met several firms and decided to appoint Jeremy Gadd Associates to advise on organisational aspects and Postlethwaite Solicitors to advise on legal aspects; they were simply the right fit for us.
Now the team was formed we wrote the project contract which included the following elements:
- Vision and goal
- Risks and opportunities
- Critical success factors
- Milestones and completion dates
- Conditions for completion
- The forming and implementation of a clear, well-structured governance and sale framework
- Employees who understand the rights, roles and, responsibilities of employee ownership and live the values.
- Fully engaged leadership team and managers.
- A sustainable ownership model that maintains long-term sustainable profitability