Marc Lacoursiere – We often hear stories of conflicts from business succession due to family differences, or outside purchaser expectations that vary from those of the owner. Many of these conflicts are rooted in similar issues, regardless of whether it’s an internal or external succession. Other conflicts are more unique to each type of succession. So, let us consider each of them accordingly.
Conflicts Arise from Internal Succession
When the plan is for a next generation or other type of family succession, the sorts of conflicts that arise include who is capable of running the business, who wants to run the business, and how will the business change hands – financially and otherwise.
The older generation has had the advantage of years of experience including the opportunity to learn from mistakes. On the other hand, how open are they to new ideas and accepting new realities? The exchange of ideas may be difficult if either party lacks communication or listening skills.
From a financial perspective, there is often more flexibility with internal succession since the value generated from the business, beyond what the current owner needs to live, will likely eventually go to family.
Conflicts Arise from External Succession
Like buying a house from an existing owner, when you buy a business there may be things that don’t go as expected. Crucial variables such as employee dynamics, customer relationships, and competitive circumstances may not be fully apparent. If the acquisition is intended as a ‘fold-in’ where parts of the existing business will be assimilated into the acquiring company, there will be potential pain from lost jobs, cancelled products, changes to market approaches and more.
Change Brings Conflict
It’s unlikely that all stakeholders see the next phase the same way. When something doesn’t go as planned, we might see it as a broken promise. Furthermore, the past owner, who is often given a transitional role, sometimes feels – or is – marginalized by the new leadership. Although many business changes might be logical, the ‘old guard’ still gets a bruised ego.
Most succession projects involve swapping out leaders who have held key roles for many years. The culture has become ingrained – for good and bad – with how it functioned. Build a high level of consideration of all stakeholders’ feelings into your change management strategy. This will help mitigate some of the unavoidable anxiety that comes with succession.
Accept that some conflict may be unavoidable and if the focus is on the problem rather than the person, there is a greater likelihood that all parties will be solution-oriented.
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