A Hispanic Business Experiences Transitions
In order for a Hispanic business to thrive during a transition, plan and set a strategy in place.
I created a Hispanic business research firm. He spent many years nurturing it and ultimately sold it to a larger research firm. I quickly learned business transitions can be tricky if you’re not prepared. In this piece Carlos highlights what to expect.
Nothing lasts forever. Nothing, including you.
So even as you are building your Hispanic business and totally preoccupied with day-to-day operations, at some point you must act on the exit strategy you had built into your firm’s strategic plan. Because as an entrepreneur I really didn’t start my company with grand designs of building an empire or being the boss of the world, I always expected to sell my company to a larger firm at some point.
I hoped to build enough value to have my company worth something substantial, but I was also building a team, a capability, and a presence in my community.
Over the years various acquisitive companies had courted us.
Some weren’t very good fits, some turned us off completely, one in particular was spectacular and we were really jazzed and it looked like this was going to be IT, but then their parent company got in trouble and they were sold off. We entertained offers that were weak, weird, insulting, insufficient or just plain odd. And we turned them all down.
Some were easy to dismiss, but in any serious look, before a formal offer was tendered, we had to do a lot of due diligence work, starting with an NDA (Non-Disclosure Agreement) and running through past three years of financial data, projections and disclosures.
It was often a lot of work for nothing, a lot of costly CPA time, and a lot of executive time. But along the way, we did learn a lot about the process and about our own operations. Ultimately, I didn’t regret it, even if I might have at the time.
Transition planning
One aspect of transition planning is being prepared for your possible untimely demise that is, insurance. That includes key man insurance (an anachronistic expression meant to include female executives as well), and contingencies for incapacitation or death.
Stuff happens.
Besides, many of your clients will expect this to be in place. And part of this is training your key staff to take over for you very handy for vacations, crucial in crises. So, one of your key jobs as an entrepreneur is to train your staff to be able to take over for you should the need arise.
They might not have your personality, they might not have your exact skills, but training is one of your most important jobs.
Business partners
Many Hispanic business owners start their businesses with partners.
I did not do that, but it is a very viable way to go and many times I wish I had, because it’s tough to wear all the hats in your firm. Still, I have heard horror stories of partnerships gone badly, and since a business partnership is very much like a marriage, divorce can be ugly. There is no one right or wrong way to start and grow a business, and many of the decisions you make will depend on the circumstances, your access to capital, your network, your market timing, your clientele, the macro economy and aspects of your personal life, too.
After having been let down by so many different potential suitors and as bigger birthdays were approaching, we entertained the notion of a junior staff buy-out over time. I know of cases where that has worked quite well, but in a prolonged recession, this was not a financially viable option for us. We considered selling off specific assets, but there are times where the whole is greater than the sum of the parts, so we didn’t go that route. But we did reach out to several of the firms that we had had positive relationships within the past.
One of them came back with an offer to buy us out, so we began the process of selling our Hispanic business research firm.
This was not lightly entered, and this was not always easily fathomed emotionally, but it made sense, we needed to do it, we saw great upside potential for it, and there we went, into negotiations and due diligence madness.
Related content:
Small Business Growth Through M&A
