The first few months after acquiring a business are often critical. Since the new owner is unprepared, he faces an overwhelming number of tasks and may become discouraged. Staff and customers may become anxious about the change. In this context, a period of support from the seller can reduce the risk of failure and ensure a smooth transition. 

Duration. Although a period of 3 to 6 months is often mentioned, there are no rules for this. 

It should be remembered that buyers often minimise the time needed to become fully operational. Their fear, no doubt, is that they cannot establish their authority while the former manager is still there. The famous saying about the two cocks is often used to justify a very short support period. 

Emotional. Usually, the seller wants to give the buyer a helping hand to ensure that the business continues to prosper. In most cases, this desire is altruistic and sincere. The image of the boss clinging to power should not be generalised. There is a simple way to avoid this trap: the buyer should be able to decide at any time to end the support period early or reduce the seller’s services. 

It should be noted that the acquirer sometimes makes psychological mistakes at this stage, probably wanting to impose their ideas too quickly. Before mixing things up, it is important to have a good understanding of how the business works. So it is in the buyer’s interest to listen and learn first. As long as this learning phase does not drag on, it will not undermine his authority – quite the contrary. 

Compensation. Some buyers think support should be free, given the sale price paid, especially when a deferred payment coincides with the support period. 

However, we think it is important to make a clear distinction between the sale price and the fee. All work deserves to be paid for, and buyers will be freer to defer support if they are paid for it. 

Clarity. The objectives and role of each party should be clear. The seller must understand that his goal is to leave the company and thus make himself redundant. His role will evolve from decision-maker to coach. By giving advice – behind the scenes! – to the buyer and by taking his side with the staff, he maximises the chances of success. 

They should keep in mind that it is the buyer who will have to make the decisions. Therefore, they should voice their opinions and leave the last word to their successor. 

The buyer’s goal should be to become a credible and trustworthy manager as soon as possible. They will listen to the seller’s advice and question him or her when in doubt. Regular coaching calls can be helpful. 

The buyer will have to grow in his role to assert himself gradually. Coaching can therefore take place in decreasing stages. 

The practical arrangements (duration, timing, type of services, compensation, etc.) are ideally set out in a service agreement signed at the same time as the sale of the business. 

It is often overlooked that a successful support period helps the new owner get into the swing of things, allowing him or her to benefit as much as possible from the transferor’s experience. 

Tanguy della Faille 

FB TRANSMISSION 

tanguy.della.faille@fb-transmission.com