Contractor Exit Strategy 5 of 6: Sale to Management

Selling the business to management is a very common exit strategy for contractors.

D. Brown Management Profile Picture
Share

This sale might be integrated with passing the business down to family or used when there is no family involved in the management of the company.  

Succession: Exit Strategy 5 of 6 - Sale to Management.

This sale may be to one person or to a group of people, but in either scenario, there must be:

  1. A clear leader of the business (post-deal) who has already proven themselves with strategy, key relationships, and the required management competencies to run the business.  
  1. A management team that is aligned with each other and behind this leader.
  1. Strong business financial performance to fund the ownership transition.  
  1. Trust from the current owner that this leader and the management team will continue to effectively run the business because they will essentially be financing the deal.

This type of deal will net the current owner more than a wind-down and if managed correctly, will provide continuity for all major stakeholder groups.

Building and preparing a management team for this type of exit strategy is a very deliberate and rigorous multi-year process.  

It requires a disciplined approach to aligning the 4 critical layers of talent management, including market strategy, organizational structure, and key role responsibilities.

Always building a management team with this type of exit in mind will increase the valuation of all other exit strategies while keeping the wind-down option off the table.


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

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

Cash Flow Tip 5 - Flowchart Your Cash Flow
You can only see the full value-stream of cash flow including the waste, the people and the opportunities for improvement by mapping out every step.
Project Delivery - Design-Build
The Design-Build method of project delivery eliminates a couple of the major negatives inherent in the Design-Bid-Build method, integrating construction and design by putting the contractor fully in charge of the process.
Structure and Strategy - Sustainable Growth Through Balanced Execution
As a contractor grows there are inflection points where their market strategy and organizational structure must be evaluated and refined. These changes are just part of the cycles every business goes through. They are never easy but are always necessary.