Your Company: The Next Generation
This involved assessing all aspects of the business, including sales and operations, to identify weaknesses. “To support the succession plan, you want to build the infrastructure up so it can support the post-owner environment,” Kuperman explains. “You have to take a step back and look at where the holes are.”
The presence of a clear-cut succession plan made DBL a solid prospect for its acquirer, according to Kuperman, because it was evident that the seller’s management team was organized and focused on its core business. “That, coupled with the fact that we brought in the right team members to run different aspects of the business, made it simpler for someone to come in and acquire us for the money that the company was sold for.”
DBL’s transition from a privately held company to a subsidiary was, according to Kuperman, a smooth one. Lorsch left in December 2007, and DBL’s decision to carry out succession with new owners was, in large part, due to the next generation being too young to take over. He admits he did get the jitters.
“Whenever you have a company come in and buy you, promising ‘We’re not going to change anything; don’t worry, life is good,’ you have to wonder if it’s true,” Kuperman says. “You have a time element in there that, if you do not believe what you’re being told, you’re not focused on the game.”
During a succession, managers must communicate with their staff to encourage continued focus on the core business. “You have to be able to deal with people on your team and say, ‘Here is the message. I believe the message. Let’s not take our eyes off the ball.’”
Ellis advises that once the succession is imminent, business owners start by informing upper management, working their way down until everyone in the company is aware of what’s going on. It’s crucial that everyone feels like they’re being taken care of. As long as people feel comfortable that they’re going to be taken care of, it’s going to be a fairly easy transition.