Keep Succession in Mind When Developing an Exit Plan
Owners of successful software businesses face complex decisions when they are ready to exit their businesses, especially related to succession planning and protecting the value built in the business.
Key questions that emerge may be:
- How can I step away from my business while preserving the legacy I’ve spent years building?
- How can I ensure the long-term satisfaction of the employees and customers that I care about?
- How can I successfully execute a succession plan?
Since Volaris Group is a global leader in software M&A and operations, we have helped many owners work out their succession plans during the sale of their businesses, and also in the years after the sale. Below, we’ve compiled some advice to share on this topic.
Who will be your successor?
If you are looking to make an exit from your vertical market software business, it is especially important to have a strong successor who deeply understands your specialized market niche.
Having a successor in mind helps build a convincing proposition when you begin speaking to buyers about exiting your business. A buyer will be interested in knowing your reasoning for why you see leadership potential in your envisioned successor, and what additional training or development that person might need to thrive as the new leader of your company.
When you enter the market with a well-devised succession plan, it helps ensure that the strength of your company’s leadership can be well-positioned to buyers. It also ensures that the seller’s immediate goals for exiting the business are understood and met upon close.
If you don’t yet have a successor in mind
If you don’t yet have a clear idea of who your successor should be, but wish to exit the business in a few years, then a high-quality buyer may be able to help you identify potential options for successors. Together, you can assess the knowledge and qualities needed in the next person to do your job. At Volaris, our body of best practices and network of knowledgeable leaders means that we can not only help advise on suitable successors, but also help get your next key business leaders ready to take on more responsibilities.
Take the time to think about how you will retain key employees once you exit your business. It’s important to think about how a transition to a new leader might affect your current employees and their loyalty to the business. If your employees still have many working years ahead of them, they will want to know what career paths might be open to them if the company is sold.
By developing your succession plan further, you can realize your short and long-term personal and professional goals, while also protecting the company’s legacy and investing in your people.
Long-term strategy puts the ‘success’ in succession planning
In closing, we at Volaris believe that effective succession planning is a thoughtful and ongoing multi-layer, multi-year process that incorporates a long-term business strategy. The best succession plans start well before the sale of a business and continue after the business owner successfully makes an exit.
When speaking with buyers, you may wish to ask about how they can work with you in creating a succession and talent management plans for both current and up-and-coming leaders at your business.
Volaris has worked with many software companies to develop their succession plans over more than 25 years of acquiring businesses. We have accumulated a large body of knowledge and experience with respect to succession planning and talent management, and we explore these topics in great detail with potential sellers during our M&A discussions. We work with business owners to identify successors, while also providing future leaders with tools and training to ensure the long-term growth and competitiveness of their businesses.
How succession planning worked after the TASS acquisition
Since we care about building on the legacy of a business and continuing its growth for the long-term, we invest in developing the talent of leaders who join our organization. We are committed to moving the most promising leaders upward in our organization as new opportunities arise for them.
One successful outcome we can highlight is our acquisition of TASS, where we worked to develop a succession plan and long-term career path for Craig McAlister, a long-time employee at the company. We have included links for more reading below.
The sale [of TASS] to Volaris personally worked out very well for me. I’m now able to enjoy the rewards of leading TASS without the personal risk of debt, and I’ve become a more effective leader.
— Craig McAlister, former Managing Director of TASS and current Group Leader at Volaris Group