3. Unmanageable growth
It may seem counterintuitive to think of growth as a bad thing, but over-expansion can chip away at a successful business. The ambitions of new ownership, whether family or former competitor, may lead them to pursue new markets that aren’t as profitable, borrow unwisely to keep growth at a particular rate, overprice products and services, or simply make poor investment decisions. While it’s difficult to predict what the new owners will do with the business, it’s not impossible to influence their decisions after a sale.
Companies that address their organizational weaknesses before implementing growth strategies are more likely to be successful. Similarly, taking a transparent approach to the strengths and weaknesses of the business during a potential sale can help frame any future growth initiatives the new owners might adopt. Of course, the most important element to protecting the business post transition is to really know who is buying it. Alternatively, the current owner may consider a partial sale rather than relinquishing full ownership. This will allow retention of some interest and decision-making power.