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One of the biggest challenges facing any entrepreneur or business owner looking to exit from the company they’ve founded or operated is what happens to the people they leave behind?
It’s easy to think that an acquisition, sale or investment is all about getting the most money possible, or the right earn out terms, or being able to step away in good time. But when push comes to shove, most owners spend more time on a single question.
“What happens to my team?”
You see it mentioned time and again in our case studies.
Take this from IPRS Group’s Martyn Jackson:
“With other shareholders to consider – and hundreds of jobs to look after – I needed to make sure [that investment] didn’t come at a risk.”
Exiting a business isn’t just about your own future. It’s about the future of the team you’ve built and worked with day in and day out.
Here are three key things to consider as you look to protect your employees ahead of your own exit.
One: Find an investor who understands
Safeguarding jobs is all about ensuring consistent success over time. The most reliable way to deliver that is to focus on what already works.
Bringing in external investment from people who don’t understand your industry, your customers or the markets you operate in is a surefire way to increase the amount of risk involved in your exit. And the more risk, the more chance there is that your employees could be negatively affected.
One of the questions you should always ask is “do they understand my business?”
Take this from Reach’s Heather Batey about the reason she decided on handl Group as the right investor for her business:
“handl really got what Reach was all about. They understood our place in the market, and the opportunities available. They were already offering advice before I agreed to sell. I knew they were taking my business seriously, and that encouraged me.”
That’s the kind of encouraging sign you should look for ahead of agreeing to investment.
Two: Find someone who’s proven they can grow a business
One of the first things business owners are tempted to ask an investor is how much they’ll be able to put into their company. Really, it makes more sense to ask how they’re expecting to see a return on their investment.
Some investors will break up and sell on the companies they acquire, leading to more uncertainty for employees and even more risk. Choosing a buy-and-hold investor with a proven record of growing and expanding the companies they acquire is a way of ensuring your employees won’t be seen as disposable assets.
When people seeking investment ask us to prove our ability to grow a business, we explain how Speed Medical and MLA have become market leaders since our acquisition, and how EQL and Cogent Hire have grown from early-stage businesses and start-ups into successful established companies.
Continued growth and year-on-year improvement is one of the best ways to protect jobs and livelihoods.
Three: Find someone who values your people
When your people are valued by those who’re investing in your company as you exit, they won’t just be secure in their existing roles. There’s every chance they’ll be given the opportunity to thrive.
Take handl’s own James Blyth, managing director of Coplus.
In 2014, Coplus was being run by a team looking to exit. They weren’t well placed or well prepared to face changing regulatory frameworks, or to provide the financial investment needed to drive momentum.
At the same time, handl Group was looking to invest in companies that would work well alongside our original group of companies. That’s where James’ rise up the ladder began.
“From day one, handl Group didn’t decide they were bringing in a load of new people to run the business. They wanted to see what they had, so they got everyone around a table, looked at the different departments and saw a gap for someone who knew the business and could help guide it.”
“I put my hand up. The rest, I guess, is history.”
First as operations director and now as managing director, James’ career at Coplus really shows that an investor who values your people does more than just reduce the risks to your employees’ futures.
It can give their careers a welcome boost.
If you’re looking to exit your business and protect your employees, handl Group could be a good fit for you. One of our acquisition criteria is that the companies we acquire have a leadership team that can be developed and invested in, giving your employees the chance to grow their careers as we grow your company.
To discover the other four criteria, click right here.
