I was recently engaged by the estate of a founder to assist in finding a new owner for their business after the founder died. There were a lot of valuable business lessons that came out of this process that I wanted to share with you. Not for your estate survivors after you die, but instead for you before you die, so you don’t repeat the same mistakes of this other entrepreneur that failed to properly lay out a clear legacy plan in the event of his death, leaving the survivors scrambling looking for answers in the wake of his death.
The Business and Situation
The business here was a solo-owner charitable foundation that runs a big annual event, an event that was run by the founder for decades. The founder died with no clear plan for what do with his business in the event of his death, especially with nobody in his family wanting to pick up the reins. But everyone associated with the event wanted the event to survive for years to come, especially to honor the legacy of the founder. The problem was we couldn’t get into the head of the founder to ask him who he would have liked to take over for him. Instead, we had to come up with candidates on our own. And that left a big void for us to fill.
Step One: Search for Breadcrumbs Left by the Founder to Help Guide Us
The founder had considered putting a transition plan in place in the past, and we were fortunate to find a few files in his office that referenced those specific partners. He even went so far as having detailed merger discussions with two of them, the notes and draft agreement left behind in the files. But how do we interpret that? Yes, they are good candidates because the founder thought they were good candidates in the past? Or, no, they are not good candidates because they never got to the finish line for some unknown reason? We decided to pursue them, to see if there was any interest in rekindling those old discussions.
Step Two: Speak to the Staff and Current Board of the Business For Their Thoughts
The surviving staff had been associated with this business for years and did offer up several specific suggestions of potential companies to reach out to, to take over the event. But the staff were more execution-level in their approach and thinking, and I was looking for more of a strategic-level list of companies where the missions of the two businesses were perfectly in alignment with each other, to increase the odds of long-term survival of the event.
The board was also helpful, in that they presented themselves as a candidate to take over the event, given their decades of history there. But that presented a couple problems. Their recommendation was biased for their own personal interests, and it is one thing to be a board advisor, and another thing to be the actual event operator, and they didn’t really have those needed operational, marketing and fundraising skills. There was also the issue of the event having struggled for the last couple years to grow its audience back to historical heights, and the fear of handing the event off to the same team that oversaw such historical declines.
Worth adding, I was curious why only some of the board members reached out to me to express their views, and I hadn’t heard from the others. So, I called a few of them to seek their input, figuring they did not have a “horse in the race” and would give me a candid opinion. Those were very telling conversations; the board members were not in alignment with each other, with one half of the board not really desiring the other half of the board to take over, to keep their going forward involvement. I wasn’t expecting that, but it certainly helped directionally find a partner that would be embraced by most all. And in this case, it wouldn’t be the fractured existing board.
Step Three: Figure Out Your Exact Needs and Outreach to New Partners That Fill Those Needs
We came up with a scorecard of everything we wanted to find in a new partner. Things like strategic fit, financial resources, event production experience, event marketing experience, reputation, interest in preserving the legacy of the founder, personality fit, vision, etc. Strategic fit was the most important and we came up with a short list of organizations that served this same target market and reached out to each of them, interviewing each of the interested parties for the criteria above, and ultimately selecting a winner that “checked all the boxes” to move forward with the transition.
Step Four: Prepare for a Lot of Bruised Feelings
In this project, we had five interested parties, but only one could win. And one of those parties, the current board, felt they were “entitled” to win this event given their decades of history with it. But it was clear for many reasons they lacked the needed skills to be successful in not only running the historical event, but growing it into something bigger and better than it had ever been in the past, to truly honor the founder’s legacy. When many of these board members learned they did not win this process, the decided to entirely disengage with the event. Which is really sad. As that meant it really wasn’t about the event, or the cause, or the founder’s legacy that was important to them; it was simply their personal ambitions which was driving them. That confirmed we made the right decision.
The other issue to navigate through was all the various surviving family members had differing opinions of how the process should be run and who should ultimately win the event. And there was no way to make everyone happy, which bruised a lot of feelings that their opinions were not being listened to. But without the founder making his intentions clear, and “lots of cooks in the kitchen” in the wake of his death, the project was ripe to leave people feeling discontent.
Step Five: Hug All Legacy Partners and Make Them Still Feel Loved to Embrace the New Partner
In addition to making room for all the old board members to stay engaged in leadership roles with the new event owner, there were lots of event sponsors, vendors and other partners that needed to be communicated with and embraced to keep them involved in the future. In this case, the event was so tied to the founder, that there was a risk of many of the historical partners not continuing their involvement going forward. But with the right communication strategy, vision and outreach plan, we were successful in getting most historical partners to continue their involvement with the new ownership. But in the absence of the founder giving clear direction here, to ensure his legacy desires were communicated to all ahead of the time of his death, I think we did a good job of filling that void.
The Moral of the Story
The survivors of the founder
should have never been in this situation in the first place, having to “guess”
what the founder would have preferred to happen to his business in the event of
his death. It is very important you
document your desired transition plan for your business somewhere. It would have been so much easier for the
survivors to simply shut down the business and move on with the rest of their
lives. But in honor of the founder’s
legacy, they put in the work to make a smooth transition happen. Hopefully, the
founder is happy with the selected outcome, but I guess we will never know for
sure. Don’t put your own survivors in this
same situation when you die.
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