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

This topic contains 36 replies, has 37 voices, and was last updated by  Kai Jie 10 months, 1 week ago.

Viewing 7 posts - 31 through 37 (of 37 total)
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  • #113754

    Wei Zhong Ong
    Participant

    I think the former owner can remain as an advisor but should be open to allow new management to take over the merged entity. They will come with a fresh set of perspectives and ideas to improve the company’s business operations and chart its direction moving forward.

    #113852

    Generally speaking it is often critical to retain and properly incentivize the (previous) owners as customers, suppliers, employees and other stakeholders might feel loyal to him/her. In particular in people businesses. Our company has done acquisitions in which previous owners then went on to make successful careers. But in many other cases it was a matter of going through a transition process of a few years in which the company reduced the dependency from the previous owners and prepared a succession plan.

    #114049

    Awais Dilawer
    Participant

    it completely depends on the situation, nature of the business and the present need of hour. sometimes companies need to be more competitive, so sticking to the old cultural rules of organization won’t help. However, in order to retain the expert officials with the organization, the old owner can made some specific team in the business who can present their ideas and it would be the owners choice to act upon it or not keeping the situation in view. Again its a complete matter of the situation a company is going through.

    #114052

    Bradley D. Soto
    Participant

    Retaining the former owner of a family business you have integrated is dependent upon a few factors such as whether the Target company’s product(s) or service(s) are very specialized & the Acquiring firm does not have that expertise on their senior management team or if the former owner has extremely close & respected relationships with key customers (or employees) necessary for the combination to be successful. In either case, it could make sense to retain the former owner as a Strategic Advisor to the CEO for a period of time (post-integration) with very specific duties and clear (non-decision making) responsibilities that are focused on supporting the CEO.

    #114088


    Participant

    I have been in charge of several integrations, my company policy is to keep the owner in the General Manager role at least two years to ensure there is a smooth transition. Sometimes this is not the case. Earn-outs related to short term financial performance usually crate tensions that work against the deal.

    I think that the more different the business model and processes of the acquired company are to the buyer, the more you need the previous owner (in my case now they were minority shareholders) to serve as bridge between the two organisations. Also you need somebody from the buyer to act as a bridge to ensure both sides are aligned.

    Empathy is a must, mainly when you acquire companies from different countries and cultures. The selection of the integration team is fundamental for success. The wrong team can kill a excellent future.

    #114642

    Rodney Satterwhite
    Participant

    The owner has to decide what is best for herself through the lens of the NewCo, its culture and her former organization – If they have value to offer and can continue to learn and be agile when adding the value. Leadership, strategic/role clarity and communication are all crucial.

    #114659

    Kai Jie
    Participant

    We should examine the purpose of integrating the family business in the first place. If the purpose is to have the business managed by competent and qualified experts that was not possible before, the owner should perhaps not be involved. However, if the owner has the necessary expertise and is looking to take a backseat after the integration, he/she can still be involved from an advisory or supervisory capacity.

Viewing 7 posts - 31 through 37 (of 37 total)

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