After integrating a family business, should the former owner remain or not?

This topic contains 23 replies, has 24 voices, and was last updated by  Rochelle Ramos 1 week, 4 days ago.

Viewing 15 posts - 1 through 15 (of 24 total)
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  • #75356

    Cesar Otero Lucas
    Participant

    One of the most difficult processes I have lived is the integration of a family business into a bigger company. The question was whether maintaining the former owner was better for the business in terms of preserving the knowledge and experience or if it is an anchor for the new management style the teams have to adapt…

    #75446

    Seun Yakub
    Participant

    I think performance should always be the decider, although having said that I am cognizant of the importance of culture in businesses.

    #77481

    mikep.mclean
    Participant

    Too many variables to consider. Generally speaking I think it’s best for a former owner to slowly remove themselves from the organization unless it was predetermined that he/she/they would remain in a leadership position for a predetermined amount of time. Otherwise they could become a distraction to the process or worse, lead to confusion among employees as to the relationship with their former boss.

    #81855

    Clark Murphy
    Participant

    In my opinion, it depends on what the “family business” acquisition was intended to be used for? If you need the Family business to continue running as is, or if this “Family Business” is in a new market/industry and you need the owners expertise then you keep the owner. But if you plan to modifying or growing this “Family business” into something else, then I’d advise to let owner go.

    #81981

    This is certainly a very difficult question to adress as it largely depends on the situation: many times a succesfull owner with no successor inplace would easily step aside especialy if he/she is of a certain age. In other cases the owner would be difficult to accept leaving his baby to others as most of teh times he/she knows always better.Sometimes owners of familly business know the business but have difficulty to accept and adopt new management processes and concepts of well structured coprorations.
    So it really depends but generally speaking I am inclined to believe that in most of the times the owner is difficult to remain and is probably also better not to…

    #82030

    Enrique Blanco
    Participant

    Quite a tough question to be answered… However, in general terms I’d generally consider quite positive for the former family shareholders to remain “in touch” with the business.
    There are different alternatives. For example, salaried staff, minor shareholders or external advisors linking their future fees to the accomplishment of financial milestones.
    Having being managed previously the company as a family-owned business there are sensible issues, such as the close relationship especially with the rest of staff and clients, that have to be addressed properly during the transition.

    #83572

    Tyson Poulton
    Participant

    I have typically removed the previous owner from any role in which there would be operating decisions and have placed them in either a consultant role for a temporary period of time to assist with the transition until operations have smoothed out post acquisition and integration or have placed them in a position to support future growth leveraging their existing relationships but this depends on a few factors: their desire and transition goals, their skillset, etc.

    These decisions are largely due to previous failures around allowing previous owners to have operating decisions and they could never accept the business model shifting the way it needed to and always created friction in the change management processes for operations.

    #85074

    Jenny Ewen
    Participant

    Very tough decision – depends on the situation, motivations for the acquisition, intentions for independence of the target, leader themselves, etc. Each situation likely needs to be addressed differently and also with the assumption that what you originally decide may change depending on how things go. We have just acquired a small company (not a family company, but founded led by 2 brothers) and so far they are working out as continuing to lead that company with reporting up to a division in our much larger company. We wanted that company to keeps it’s tech start up feel so it was important in this instance that they stay.

    #86502

    Christoffer Balieu
    Participant

    As already mentioned, this certainly depends on the situation. However, given that there is good chemistry between the seller and buyer, I believe it is wise to keep the original owner in the management team for at least a while. This is because nobody will know the business better than he does, and he can, therefore, help the buyer integrate a new management team, that over time will be able to completely replace the previous owner of the company. Nonetheless, it would never be wise to lose the previous owner’s know-how of how to successfully run the family business by instantly replacing him; this, of course, given that there are no other complications present that would require his immediate exit.

    #86739

    Gabriele Frigerio
    Participant

    I think it depends mainly from cultural aspect and nature of transaction. If we are dealing with two companies, never involved before into a transactional process, it might be challenging for former owner to remain into it and proceed activity.
    If for instance we would think to an acquisition driven by a major company interested into broaden its portfolio, business model of buyer might be extended to sold one, so I would go for a leave.

    #90690

    Anne Becker
    Participant

    I think it depends on the value the former owner can bring to the company. We did this once but the owner was treated as a consultant for one year. He brought valuable knowledge and experience and we made sure we took the time to be able to transfer that knowledge to our team.

    #92023

    Merger & acquisition is not just a corporate strategy; it’s a personally disruptive – often traumatic – event. It is typically a period of tension, uncertainty, and even chaos. Workload ramps up, as do pressure and stress. You have to quickly adapt to unfamiliar policies, practices, and politics. Owner should leave immediately. By staying, it will make matters worse.

    #92255

    Ang Pek How
    Participant

    In my opinion, it should be assessed based on a case-by-case basis. Generally, I think the former owner should remain in the Company for a certain period of time to ensure the transfer of knowledge and experience to the new team. This is also to prevent the resignation of the existing employees in view of the change of operating culture and the owner. In many cases, the employees left the Company once the owner left due to personal reasons such as the feeling of insecurity or uncertainty of their career prospect.

    #92268

    Melvin Ashley
    Participant

    This is very situation based. Part of it comes down to the personality of the owner and how he meshes with leadership of the new organization.

    #93121

    Although it is desired to keep former business owner to keep the experience and knowledge in the company, it may not be possible to get the people aligned with current management. Given this uncertainty, it shall be considered to keep them as managers with contingency raiders. So that such managers can be removed or moved to a different role if their views do not align with new management. Even if the new management does not want them in the new team, it is worth keeping them as mentors or advisors in the company.

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