The way a business transitions from one owner to the next can have significant repercussions for its future success. Could you imagine what might happen if, upon completion of the sales transaction, the seller handed the keys to the buyer and, with a “good luck”, simply walked away? So much knowledge, insight, and history would also be going right out that door.
For that reason, negotiating and carefully planning how the transition will take place is of primary importance.
The Seller's Role During the Transition Period When a Business Sells
The way in which the seller is involved after the sale will vary from one deal to another, however, make sure you make the most of their availability during the transition.
Consider phasing the previous owner out gradually during the transition period when a business sells. During the initial phase, the seller might continue working on a full-time basis without any change in roles or responsibilities, giving the buyer a chance to observe and learn how the business operates.
In the second phase, the seller remains working at the business, but the new owner is now in charge of making critical decisions. After a while, the seller can go down to working on a part-time basis until, eventually, it is not necessary for him or her to show up for work anymore but remains available for phone calls or consultations.
The buyer may be coming in with lots of great ideas and plans for the future for the business. The transition period when a business sells can be an excellent time to work on those plans. While it’s not a good idea to implement sweeping changes immediately, being able to tap into the previous owner’s experience and perspective can help you avoid costly mistakes and setbacks.
Part of the objective of your transition strategy should be to make it as seamless and worry-free for your customers as possible. To do this, start with your employees. If they are worried or concerned about the future, the quality and service they provide to customers may be compromised. Meet with your employees to explain what they can expect from you. Be aware of the mood and morale of employees and, without being dishonest, do what you can to reassure them of their job security and to boost their morale.
You'll also want to communicate with your vendors and suppliers to keep them informed of the change. For key vendors with whom the company enjoys a special relationship, you may want to consider scheduling a personal meeting that includes the seller.
Don’t overlook communicating with your customers. You'll want to reassure them that, under your management, they can expect similar or superior levels of customer service. It's also an opportunity to solicit their input and perspective on what your company does and how it could be improved in the future.
Of course, if the seller was in charge of managing critical relationships, you’ll want to involve him or her in that transition by meeting jointly with those clients to detail how the seller will be easing out of that role and handing it over to the buyer or someone else within the company.
When you're buying a business, you're buying its assets, its operation, and its ability to generate revenue. But under ideal conditions, you're also buying its history and accumulated knowledge. It's only by carefully planning the transition period that you can ensure the transfer as much of that history and knowledge as possible.You can browse through the many outstanding businesses for sale in Minnesota by visiting our business listings page.