Mergers and Acquisitions are a key growth strategy for many businesses. However, the sale, merger, or other transition of a family-owned or privately held company is not just a financial transaction but a pivotal moment that affects every aspect of the business and its stakeholders.
There are complexities inherent in these businesses that extend beyond the numbers, including deep emotional ties, generational legacies, and intertwined personal and professional relationships. Each element adds layers of challenges that are often underestimated.
As company founders explore what’s next, one of the first calls might be to a mergers and acquisitions lawyer to better understand what they might need to do to prepare. However, as many M&A lawyers know, there are limits to the legal solutions you can offer. An executive coach can more ably guide the work founders need to do to prepare themselves for this transition.
The Value of Preparedness
For business owners, the decision to sell, merge, or transition their business is monumental. It’s not merely a business decision; it’s a life decision. Preparedness is crucial, and a skilled coach helps prepare the owner mentally and emotionally, ensuring they are as robust and resilient as the balance sheets they will be presenting to potential buyers or partners.
Emotional and Strategic Alignment
Whether they are aware of it or not, many owners of family and privately owned businesses struggle with the emotional aspects of a transition. They may fear the loss of identity or legacy and worry about the future of the employees and communities that depend on them. An executive coach helps align the transition’s strategic goals and guides these leaders through processing these emotions and setting realistic expectations. The result will be crafting a vision for the future that respects the past while embracing new opportunities.
Leadership and Succession
Transition often involves significant leadership changes and may necessitate a shift in company culture. As a coach, I work with current leadership to develop their skills in conflict resolution, strategic thinking, and change management, which is particularly crucial in family-owned businesses where succession might involve passing leadership to the next generation. Coaching helps ensure smooth transitions and prepare new leaders for the challenges ahead.
Enhancing Outcomes
From a practical standpoint, executive coaching can significantly enhance the outcomes of a sale or merger. Coached leaders are better negotiators, more adept at understanding and managing buyer expectations, and skilled at presenting their company in the best possible light. Owners can drive a better valuation and smoother transaction process by addressing personal limitations and enhancing leadership capabilities.
The impact of executive coaching in M&A scenarios is well-documented. In their 2021 publication, “Coming together: A grounded theory study of the role of coaching in the mergers & acquisitions process,” Heiki Thomas & Jonathan Passmore stated, “The literature and qualitative research support the view that the focus on the management of the human factors is a critical variable in increasing the success rate of M&As.”
For M&A lawyers working with family-owned and privately held businesses, recommending executive coaching to your clients should be a standard practice. It’s an investment that pays dividends not only in financial terms but also in the health and sustainability of the business post-transition.
As trusted advisors, your encouragement can be a crucial catalyst in helping business owners realize the full potential of their life’s work and move forward with confidence and clarity.
Your role is pivotal in guiding these business owners through the legal complexities of M&A transactions. By advocating for executive coaching, you help ensure that your clients are prepared not only legally and financially but also emotionally and strategically. This approach to M&A will set your clients—and your practice—apart, fostering successful transitions that benefit everyone involved.
Thomas, H. & Passmore, J. (2021) Coming together: A grounded theory study of the role of coaching in the mergers & acquisitions process. International Coaching Psychology Review, 16(1) 54-66.