No matter how brilliant or successful you have been to date, at some point of the disposal cycle you need to step away. You need to ensure that your departure from the business enhances your value rather than diminishes it. It seems mad doesn’t it? But any single member of a management team that has the amount of control and involvement that you almost certainly do, in the eyes of your acquirer, is a liability. Suddenly the imminent risk of your departure (otherwise why sell?) now serves only to diminish the value of your business.
So, 18 months ago I finally bit the bullet and appointed my first CEO. I’d love to say it has been easy, but I can’t. It’s actually been one of the hardest things I have ever done. Has it been successful? Hell yes! We’ve seen EBIT growth running at 100% year on year, but having a “second parent” to look after your baby has some significant challenges, emotional and operational.
So here are a few things that I would absolutely do, and couple that I may not.
- Where do I start?
- Employ someone who is much better than you
- Who is going to do what?
- Hide nothing
So what would I avoid?
You will spend weeks, months, possibly years trying to find the right CEO. I’m not sure how you could ever know if this person was right or not only having just recently met them. Think of my parent analogy - how well do you need to know someone before you would allow them to parent a child of yours?
I tried this a few years ago and it failed. So having seen it from both sides, I can confidently counsel against it. The objectivity that a high level CEO brings along with ‘their’ way of doing things is gold-dust. Add that to a lack of any internal baggage and they can arrive in an enigmatic flurry to get started.
In my experience taking a step back has had a hugely positive impact on the company. Having someone to chew the fat with, who brings fresh insight and ideas has not only revitalised the business, but has also allowed me to use my time to drive a strong, focused future for the company and help him by interrogating his strategy and ideas from day one.
This is not something that should not be knee-jerked; it needs you to be absolutely sure. But if you are intending to hand over your ‘baby’ in the next three to five years then it is never too soon to start preparing for this change.
By Mark Roy, founder and chairman of REaD Group