7 Major Stakeholder Groups in Ownership Transitions

As contractors plan for ownership transitions, there are seven major stakeholder groups that will sometimes have competing wants and needs that must be identified and brought into alignment.

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Each of these groups can have a varying degree of negative impact on the transition, some manageable and some that could tank the transition. The worst thing that could happen is if these risks aren’t seen until after a deal is done, where significant amounts of capital are lost and careers damaged. 

Succession: 7 Major Stakeholder Groups in Ownership Transitions.

The three primary groups are:

  1. Current Owners: Needing a financial return for the business they have built.
  2. Future Owners: Needing a financial return for the capital they are putting at risk.
  3. Management Team: Ensuring the business continues to run well and needing a return on their professional time invested.  

The four secondary groups are:

  1. Customers: Are the key customers tied to to the new structure via either the new owners or transitional management team? Will they follow the prior owners if they are not exiting the industry? Will they follow management team members that leave to competitors? How much will that impact the business?
  2. Employees: Same as the management team. How many are a retention risk without the current owner? 
  3. Vendors / Subs: Depending on how much of an advantage they provide the business in the market, they could be a risk to varying degrees.
  4. Financial Partners: Including banking, bonding, and insurance. Depending on how much capital is involved, their history with the management team and future owners, this can shape the deal terms and constrain profitable future growth. It can also extend the time that current owners remain at risk. 

All 7 groups depend on the business continuing to generate results at least on-part with historical averages, preferably growing sustainably.

Continue building value in your business, yourself and your key team members with a good succession strategy....

Continue building value in your business, yourself and your key team members with a good succession strategy....

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