Selling in a Few Years? Start Packaging Your Company Now

According to a Harvard Business Review report, the failure rate for mergers and acquisitions sits between 70 and 90%. Even before the deal closes, it’s not uncommon for deals to unravel.

If the odds can be overwhelmingly negative, what can you do to increase your chance of success if you are looking to sell your business?

Prepare.

Don’t wait for the M&A process to begin to get your team in gear – that’s a sure fire way to fail.

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Interim executives, or interims, have recently become an important tool that organizations can use to effectively address a variety of pressing needs. Having said that, many companies are either unaware that interims are even available or appropriate for their current situation. The most common understanding of the role of an interim is to fill an immediate need in the executive team caused by a sudden voluntary or involuntary departure. In this case, a seasoned executive can step right in and allow the company to progress unabated. While much of what an interim does is similar to consulting, successful execution is critical and unique to the role of interims. This blog presents seven case studies to help companies better understand other instances where interims can help. There are certainly more examples, but these are representative. While seven represents everything from the apocalypse to luck in gambling, we’ll stick with seven.

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The best private equity funds talk about backing great CEOs, entrepreneurs, and management teams. But in the lower middle market ($2-$15 million in EBITDA), what’s a private equity fund to do when the company they are acquiring lacks resources and the management skills to earn great returns?

What if serious talent doesn’t extend beyond the CEO or founder?

Douglas Song, co-founder of Prodos Capital Management and an investor in lower middle market companies, says that “there’s always a way to think creatively and unlock value in any lower middle market company.” He especially finds common themes among companies where entrepreneurs or families have built a great business over time, but are lacking in certain areas where partnering with additional resources will help them take the business to the next level.

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Interim executives deliver real results, in real time, real quick. An interim is unique in the depth and breadth of experience they bring to bear. This allows an interim to see hidden value in existing products/processes/systems, implement actionable strategies and gain true alignment necessary to optimize the business. The interim will review the investments the company has made into processes, organizational structure and systems. This will lead to a focus on the areas which can be easily measured and might yield the quickest return on investment such as profits, systems and process efficiency.

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When an interim CEO or CFO parachutes into a company they have first-hand experience of what measurements and benchmarks (analytics) are useful and how to use and prioritize them. There is also solid recognition that data and numbers can eliminate a great deal of negativity and get people focused on solutions. Taking action is key, and that often begins with active listening to quickly figure out the exact condition of the company.

An interim must get the facts by asking people what they see and where their main areas of concern are. It is rare during this initial listening process that someone does not say something like “if we had better lighting in this area quality control would improve!”

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Interim executives are becoming a popular alternative to using a consultant or leaving a position vacant while a search for the right person is conducted. An interim executive also brings a fresh, unbiased review of factors driving organizational health and operational results. The interim executive does not waste time or company resources trying to secure a full time job, but is driven by the opportunity to make changes which lead to a sustainable value increase for all the stakeholders of the business. The client and their customers can expect immediate improvement in delivery, quality, and cost while a search is conducted to fill the permanent position.

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Nearly every one of us has experienced leadership transitions that could be described as “good,” “bad,” or “ugly.” And the percentages of disastrous transitions are astoundingly high. As Australian sociologist Hugh Mackay says, “Nothing is perfect. Life is messy. Relationships are complex. Outcomes are uncertain. People are irrational.” So what else should we expect but to experience our share of bad leadership transitions?

What I want to share here are a few of the complexities that make leadership transitions difficult and, more importantly, how to prevent these ugly transitions from happening to you.

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Today companies operate in a complex global economy which is more diverse, connected by the Internet, and not very predictable. Many companies still pursue classic business approaches (inside-the-box thinking) with a focus on short-term results. Failure to focus on business improvement and adapting to the new business environment can cause many issues and eventually lead to delisting from a stock exchange, bankruptcy, or liquidation. How many of 1960’s “Fortune 500” companies still exist today?

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What do Bill George (Medtronic), Meg Whitman (eBay), Bob Wright (NBC), Lou Gerstner (IBM), Larry Bossidy (Allied Signal), Ted Turner (CNN) and Howard Schultz (Starbucks) have in common?

They were all outstanding leaders who revolutionized their companies by applying outside experiences and viewing through different lenses.  Unshackled by past memories or limited perspectives, their successes were a product of “what can be?” versus “what has happened?”

Does that mean industry experience is overrated?  Not necessarily, but I believe a talented leader with an outside perspective, fresh eyes and an open mind will usually outperform an industry veteran when important change is needed.  Why?

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