Are you a seller looking to sell your business? Remember that your buyer may ask you to stay on to assist him or her with a smooth transition process without which the job of a seller is not over, and you’re not quite ready to move on. You need to tell your partners and employers and other stakeholders, hand over the controls and help the new owner(s) speed up business operation post change of ownership. If you’re able to manage all these, your company can succeed after your exit and improve the odds you’ll be paid back for any vendor financing you provided. In other words, you will be expected by the buyer to enable the transition process to be completed as smoothly as possible. Don’t expect the vendors to come fully prepared for the transition either.
Any form of transition should be decided before the transaction. The process actually starts by negotiating a lucid, detailed sale agreement and finding the right buyer. The ideal buyer is someone who can work alongside you, and shares your vision and purpose of business. It is so important for the seller to work in tandem with the buyer. This is where a buyer tends to see significant value in the seller’s knowledge of his or her business, employees and clients. This invariably will set the tone for the transaction and pave the way for a smooth transition.
The buyer cannot go the whole hog during due diligence, therefore, a well-planned transition plan will assist him or her and his or her financial partners (lenders and equity investors and so on) with the deal. The closer the seller works with them in planning the change of ownership, the less likely he or she will get into trouble.
A seller can consult with his or her lawyer, accountant and other consultants on what information should be supplied and when. The buyer will obviously expect a lot of inputs during the course of transition. Communication channels have to be streamlined for a seamless transition, minus which it can be risky for the buyer. A sale can make a huge ripple in the business environment.
Communicating with the employees and partners at the right time is critical for the continuance of business. Remember there should be no friction between the seller and his or her stakeholders. The seller should be prepared to let go of ownership post-transaction. Supposing the seller is retaining a minority stake and/or financing the buyer, the buyer would want to understand the tone of voice the seller will have for making key decisions and thereby his or her roles and responsibilities and engagement post-sales closure.