Letting go -

Some-one said to me recently; it’s not about how fast you run, or how high you climb, but how well you bounce! Like that..
Last week for one reason or another was all about ‘letting go’, whether it’s letting a company go, a responsibility or accountability, a job, perhaps even a friend - it’s not easy!
One of my clients is the MD/ CEO of a successful packaging company and is contemplating selling it, last week he received a £150million valuation for his family-owned business. Instead of being overjoyed, my client, in his late forties, has been “really struggling and hesitating to just make the decision’’ While his father and various family members who co-own the business are fully onboard the with idea of selling, this man, whose children are still young, told me “I don’t want my children to grow up seeing me not going to work.”

“What a nice problem to have, I pondered, however this really gets at the heart of some difficult, serious issues.” A would-be seller inevitably bumps into big, hairy questions like, “Who am I without my business? Am I too young? What do I want to do with my life?’’. I have observed recently owners and shareholders wrestle with succession planning and have come to an almost heretical conclusion: I wonder if with business transitions, the social and emotional issues are the whole story and the finances almost a footnote?

The early bird…
Like a jolly good book, selling one’s business is often rife with tension and drama. The process can pit the interests of the business directly against the person who gave it life and breath, as it were. This is because human beings and companies rarely mature at the same speed. After the startup phase, eventually either the opportunities for the business mature, or the ownership matures and this certainly creates an interesting conflict.

The process is even trickier when a management team that has not yet reached maturity sees all sorts of opportunities to exploit and comes up against an owner who’s ready to retire. The activities that go with planning an exit—liquifying holdings, taking out capital, selling—are completely opposed to reinvesting capital to build on growth opportunities.

So how does a focused, pragmatic business owner navigate this charged minefield?
Start early, the thought process can take years and therefore I believe that it’s almost never too soon to begin thinking about possible exit strategies. Now, whilst this decision is largely personal, outside forces also come into play. From a financial perspective, the best time to sell is when business momentum is moving up. However, considering the right time is affected by the availability of capital, industry consolidation, and the overall health of the economy—all of which will have a bearing on your company’s valuation.
As I have observed first hand this last week, there would appear to be nearly as many methods for valuation as there are companies themselves. Though every deal is different, one thing is certain, the best way to arrive at an informed valuation is to prepare and get as many reference points as you can. Comparable business valuations can offer a very good starting point, as well as external advice from lawyers, accountants, bankers, brokers, friends and associates who have been through the experience before. Ensuring that you have the best financial reporting that you could possibly have in place is essential. People have got to know what they’re buying, which leads to some other questions; What creates value in your business? You may think your business is valuable, but is it valuable to anyone else? Is there management depth sufficient to run this company?

Value of course, can also be in the eye of the beholder, so the kind of exit strategy you choose will also influence a business’s worth. Privately-held companies in general have at least four choices: sell to a competitor or a financial buyer; sell to management; sell to the owner’s family; or recapitalization. Each of these options comes with its own special set of issues/ challenges! Would-be sellers to their children, for example, should remember that business acumen is not necessarily genetic, and that if you’re counting on your children to pay for your retirement, you may be in for a few ‘hairy’ Christmas dinners – or not! Have an honest, open discussion with them and find out if they’re equipped and even interested in taking over the business?
If you’re selling to management, one of my associates recalled the following tale which seemed to work well. This particular owner “test drove” his management team by taking an entire summer off to go sailing in the Med! When the team performed well, he set up a structure where they gradually bought him out over time. As it is oft said - management teams are like tea-bags - you never know how strong they are until you put them in hot water.
In all of these situations you will have to delegate and share some of the decision-making with your colleagues, so;
X Identify the resistance. Developing an awareness of why you are resistant to delegate is key. Are you just not used to delegating? Are you afraid of giving up control? Are you afraid that no one can carry out the task as well as you? Are you afraid that if you delegate the work, then you will not get the recognition and your job security might be threatened? Write down your fears.
X Notice the impact. Once you have identified the cause of your resistance, consider the impact that not delegating authority is having on you and others. This might include an increase in your workload and stress level, a decrease in your job satisfaction, and a negative impact on your relationships, both at work and personally.
X Consider the benefits of delegating authority. It could mean more freedom and time for yourself, less stress, improved work and personal relationships and the ability to focus on big-picture and higher priority issues.
X Make a commitment. Tell your boss and your colleagues (or your coach) that you are committing yourself to start delegating more tasks and authority. Write it down and post it somewhere. Ask trusted colleagues to remind you if you start to wander off from your commitment (this also means not biting their heads off – if they do!).
X Begin the process. Start with delegating tasks that will not give you heart palpitations, then work your way up to larger tasks as you become more comfortable with the process. Keep an open mind. Once you have mastered or feel more comfortable with delegating tasks on an individual basis, consider doing this for projects. Ask your colleagues what more they can do. You will be surprised what they will be willing to take on for you.
X Follow-up and celebrate the successes. When delegating make sure that you set a time to follow up with colleagues to see how they are progressing with a given task. Remember to encourage, acknowledge and champion them. Let them know that you have full confidence that they can do it. Praise them when they complete the task. Even more important is to see what the impact of delegating has on you. Write down all the positive aspects of delegating you have noticed. Ask your colleagues about how they have found the process and how they think you are doing.
Remember: the more you delegate the easier it becomes. It is like developing a new habit – in fact it is!
Letting go can be a great and liberating experience, I know that from ‘letting go’ my first company. Whether you are letting go of a business or a friend –or in my case last week a big hairy horse, there is always a time for departure even when there is no certain place to go… so, all the best!
Until next week…
Kate Tojeiro is an Executive Performance Coach at www.the-x-fusion.co.uk