A future acquirer will assess your culture, build one that will excite them
When the day arrives that you want to sell your business, owners and CEO’s are expecting the due diligence they will get on their company financials but are often surprised with the aspects that may relate to their organization culture. If the acquirer is acquiring not just your horse (your business) but they are investing in the jockey (the team), then you want to ensure it’s a strong culture that will help excite them.
A common issue we see with clients is their culture does in fact need improvement before it will excite an acquirer. And for those that try to enhance their culture, we help them think about what barriers to change that could impede their progress. Here are the top 3 reasons we see companies being challenged when it comes to trying to strengthen their culture:
- The owner/CEO and even leadership team convey in memo’s and even a meeting what culture changes they would like to see. But then they themselves don’t continue through and actually exhibit the very culture they espouse to want. So the team hears one thing and yet sees another.
- The owner/CEO conveys the new culture they’d like to see but employees wait to see if you’re serious about the changes actually happening. The issue then arises if the owner/CEO doesn’t identify opportunities during the course of a day or week when they see the new culture being exhibited and praise it and when it’s not, address it. Until employees see leadership actually addressing or rewarding behaviors that align with the new culture, they won’t believe it.
- Employees hear what the desired culture changes are but can’t make the bridge from the theory of them to the practicality to their daily job. This could be due to a lack of training/experience or they don’t understand specifically where they should apply it. As an example, leadership may convey they want a culture of “taking responsibility” so the employees understand the concept here but they aren’t sure of what it means in their daily work. Or the employees understand it but not all of them are experienced enough to confidently put it into effect. Until leadership shares what the practical execution is and ensures the employees are prepared/trained developmentally and have the experience to adopt, the change won’t go anywhere.
If you’re thinking about how to enhance your culture, give thought as to whether any of these three are impacting you. We often find that owners and CEOs don’t pay enough attention to their company culture. Investing in this area can be a wonderful gift to your future self as you present not only a better performing business but one that the jockey (your team) will also excite an acquirer. Use time as a friend to enhance your organization culture and enable growing your company worth.
