Handing the keys to key employees
When succession planning means grooming key employees to take over, a longer process is more likely to lead to satisfaction for a business founder.
The seeds are often sown with a management team already familiar with the business.
But management and ownership are two different things, experts said. And the two roles shouldn’t be confused.
Key employees typically engage in a lengthy process to become business owners, said J. Stephen Feinour, an attorney and partner at Nauman Smith Shissler & Hall in Harrisburg.
“The time is now to identify a plan,” he said. “Procrastination is the greatest enemy of any business succession plan.”
While key employees may become the next owners, it is important to consider everyone’s role or contribution when making the transition, said Paula K. Barrett, a partner in RKL LLP’s business consulting services group in Wyomissing, Berks County.
Employees who maintain significant relationships with suppliers or customers or who possess intellectual property or industry knowledge may be vital to the transitioned business and its success, regardless of whether they are part of the new ownership.
Barrett said handing a business to key employees could be in the best interest when a product, service, company reputation or legacy is important to the seller.
“Selling to a management team may not be your highest price, [but] if legacy is top priority then they may be the best buyers,” Barrett said.