Entrepreneurs: What Posture To Adopt After Taking Over An SME?

An entrepreneur who buys an SME to take over the management faces many challenges. To meet them, he will have to demonstrate humility, adaptation and listening. His ability to build trust will be an essential asset for the future of the company.

The takeover of a company by an outside manager (or “management buy-in”) is one of the riskiest forms of takeover, especially when it comes to an SME. The acquirer is in fact confronted with a “20-20” reality: he only has 20% of the information on a company which has often relied on its owner-manager for almost or more than 20 years.

A Loosely Structured Organization

Large companies and SME rely on many processes that frame the work and facilitate the transmission of information . Taking on the management of a subsidiary of a large group includes the fact of being able to rely on this organization. In the world of SMEs, processes (when they exist) are rarely written and much less structured. As for the team, it is not so common to find a structured management committee in SMEs of less than $ 30M. It is often a shock for new leaders who come from the corporate world.

Concretely, a buyer is sometimes surprised to discover that the financial management of the company does not include any monitoring of KPIs and unfortunately very often no provisional budget or monthly reporting. In other words, he will have to put tools in place so as not to drive blindly (or by feeling, as his founding seller did). As soon as it is taken over, its No. 1 tool will be cash management. This will now be his lifeline. The contractor must permanently be riveted on his level.

The lack of legal and commercial follow-up or operation management can also confuse new arrivals. Inventory management , for example, may not have been automated and the entire organization may rely solely on the memory of the logistics manager. Another example is in construction, where the monitoring of site margins is not systematically implemented, while the company’s profitability is closely correlated to the proper monitoring of operations.

Faced with this lack of benchmarks, what are the assets of a good buyer?

Reassure And Learn To Team Up

To understand how the business works, you have to rely on the existing team . She holds all the information that the new leader lacks. And represents the main strength and the main weakness of the company.

Employees are often worried about the change that this “handover” will cause. It is important to reassure them. The mistake would be to want to impose one’s vision right away. You have to give yourself a few months before starting to change the direction of the company. It is urgent  to listen and wait before deploying your strategy.

Take The Time To Listen

During the first weeks, the buyer has every interest in adopting a humble posture, immersing himself in the corporate culture and playing the chameleon. He will thus be able to better feel the group dynamics and identify the personalities who have a keystone role in adapting his speech. Active listening will also allow the buyer to appropriate the elements of language of the company to accelerate its integration.

Getting to know the managers is not enough . In a small structure, it is essential to meet all the teams, including individually. Employees will feel respected and taken into account. An SME is based on a sum of individuals. Not considering some could lead to departures or cause resistance with consequences that could unbalance the company.

Some entrepreneurs ignore this phase to focus on the technical aspects. But creating trust is a key factor in the success of SME takeovers, more important than buying “at the right price” or the ability to manage a BFR.

A Speech Of Dubbing Of The Transferor

In SMEs, the corporate culture is embodied by the transferor, who is often also the founder of the company. During the support phase, the buyer must seek to deepen the relationship of trust that was created with him before the sale.

Even if he no longer officially has power, the former leader remains legitimate in the eyes of the teams. And seeing his successor do things differently can lead to difficulties. The transition will be much simpler if he clearly carries a speech of dubbing and transfer , if he expressly affirms that the new leader is the best choice for the future of the company and its employees.

Good Stress Management

The first few months will be tough. The buyer’s ability to manage stress and adapt is essential. Coupled with his listening, they will be the keys to the success of this recovery.

Indeed, in addition to his difficulty in understanding a new profession and new teams, he will first discover only bad news “hidden under the rugs”, the good ones having already been sold to him. Added to these difficulties is the achievement of business plan objectives sold to bankers, which are often too ambitious. Let’s not forget that only 20% of buyers do better over 3 years than the seller during the 3 years preceding the sale… and to this is added the stress of repaying the debt.

Humility and caution will maximize the chances of success of a takeover from a small/smid cap owner-manager.

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