Monthly Archives: July 2013

Founders: Seriously Consider Replacing Yourself as President


OK…Steve Jobs comes to mind.  But, he kept coming back, plus this blog is about midsized privately held companies.

The Founder’s skills are often related to a concept, a product, or a better way to serve an industry he/she knows well.  If the Founder’s concept “proves out” then further investment in growing the business makes sense. But are most Founders great at both external dynamics and internal operations? Usually not. The typical scenario is that production oriented employees are hired with as few business management positions filled as possible. As growth happens, more procedures and systems are needed so the left hand knows what the right hand is doing, customer satisfaction can result and actually be measured, and changes can be cued for improved efficiencies and profitability.  And the Founder feels torn between selling bigger customers and trying to help improve day to day process. Growth slows…and the company has “plateaued.”  In some industries this happens as early as $3 Mil/yr. In others, it’s $10.

Visit to see my series of short video blogs about

The Top 9 Causes of Plateaus” and “How to Grow Beyond Plateaus.”

I’ve seen Founders hire operations oriented professionals, which can work.  But if the operations person doesn’t have enough authority, the plateau becomes even more stubborn. Employees test who is really in charge, whine to the Founder, say they want the business to grow but often resist learning new skills or taking on more responsibility.  I have lost count of the number of times I have heard Founders regret “hiring too low” when they reached this point.

I had dinner recently with one Founder who finally brought in a strong operationally oriented President.  They are delighted to work together.  The Founder’s title changed from President to Founder. No kidding.

The journey from being a large small business to becoming a small big business isn’t easy. There will be glitches once in a while.  So what.  They’ll work through those moments. But now the Founder’s hands are untied.  He can focus on bringing in multi-million dollar clients and not worry when employees request “early dismissal” on Wednesday July 3rd. (Are you kidding?! Give me a break!)                                                                          

Founders: Seriously Consider Replacing Yourself as President

Counter-Intuitive Logic When Choosing Strategic Alliances or Joint Ventures

In the typical joint venture, all involved parties spell out the goals, quantify the financial investment and expected ROI, put structured project management in place, assign leadership, and measure progress. Lawyers and contracts are typically involved so everyone’s interests are fairly represented and protected. Joint venture partners hold one another accountable.  In my experience, most joint ventures are time limited.  However, when they are successful, the venture partners tend to look for ways to continue as venture partners.

It’s odd, actually.  In most of the joint ventures in which our clients have participated, they could well have served as their own attorneys.  Bear with me here.  I am not disrespecting the value lawyers bring to deals. I am simply observing that when the leaders of a few complementary companies decide to work together to accomplish something they clearly could not have done alone, the Presidents or their CFOs can (and do) summarize the terms of the relationship on one sheet of paper. When there is a great fit and clarity of complementary purpose some of the formality feels redundant.

OK.  So what about strategic alliances?

As a President of a midsized business you undoubtedly know that joint ventures are more structured than strategic alliances.  Perhaps you have experienced fuzzy goals, little reference to ROI, open ended expectations for continued investment, no project management or progress measurement, etc.  Of course all of that lack of clarity invites participants to have “one foot in the door and the other one out.” It’s no surprise that the over whelming majority of strategic alliances end by simply drifting away from one another.

Ironically, strategic alliances are most often forged around marketing.  (As a reminder, one of my master’s degrees is in business marketing, so don’t throw stones at me here.)  Marketing is notorious for fuzzy goals, too little accountability, not enough focus on ROI, subjectivity, and inadequate project management.

Wouldn’t we all be better served if we used the rigor of joint ventures when it comes to shared marketing?  The elements of the JV process could bring the clarity needed to drive far more marketing-related successes.

Counter Intuitive Logic When Choosing Strategic Alliances or Joint Ventures


Before Entering Into An Acquisition: Consider This

The uncertain economy explains some of the decline in corporate M&A activity over the past few years.  Major corporations are still hoarding cash. Large acquisitions now seem (appropriately) less focused on geographic expansion and more focused on increasing capabilities to improve the profitability of core products and services.

But I am have noticed increased interest in acquisitions in the mid-cap arena. When you drill down deeper, you sometimes discover that a President of a privately held midsized companies views “having at least one successful acquisition under his belt as an important credential.”  In the President’s mind he has proven that he understands how money works, can win a potentially complex negotiation, can eliminate a competitor, and is a serious contender ready for bigger and better things. Can you see the element of ego involved with the view of first acquisitions?

So when an opportunity surfaces, that President tends to jump at the chance and dives right into projecting how much money they will make when the acquisition works.

It has been my observation of the behavior of Presidents of many companies end up doing any of the following unproductive things:

  • become so distracted by acquisition negotiations that they drop the ball on major proposals.
  • suddenly pull back and not involve their Controller or CFO in analyzing the potential cost of acquiring a business.
  • “go dark” and become very private and not communicate what they are doing to their COOs, VP Sales, or other members of their executive team.

Think about the damage and loss of trust when that happens!

A President can become so determined to make his first acquisition work that he skips important due diligence steps.  This is often referred to as “falling in love with the deal.” I laughed when I heard that phrase used about CEOs of larger companies during a recent webinar, M&As VIEWED FROM THE BOARD AUDIT COMMITTEE PERSPECTIVE sponsored by the NACD and KPMG.

“Falling in love with the deal”

This is so true and is worth repeating, because it is exactly what happens.  But, if you are the President of a privately held midsized company, you can’t afford this mentality.  Consider the following to protect your interests:

  • taking a seminar or two about what’s involved with due diligence
  • involving your executive team in the discussion, since you will need assistance to succeed
  • establishing at least an advisory board with experience in things like acquisitions, so someone asks you objective relevant questions
  • the cost of distraction, lost trust, missed opportunity, etc. if you let yourself get all wound up in trying to prove you can negotiate an acquisition on your own
  • And also ask yourself why you feel the need to prove yourself or why you are looking for greater challenge…more action.

Changes in what you are doing on a day to day basis could free you up to take on new exciting challenges (including acquisitions) in a more appropriate and cooperative manner.

Indicted Birdsall Services Group – Lessons to be Learned

The media headlines read INDICTED NJ ENGINNERING FIRM, BIRDSALL SERVICES GROUP, SOLD FOR $5.6 MILLION TO CALIFORNIA FIRM. The winning bidder at the auction, PARTNER ASSESSMENT, immediately pledged that it won’t make political contributions in New Jersey. PARTNER ASSESSMENT took over BIRDSALL’s existing contracts and future revenue, which include several major government funded projects. About 135 of Birdsall’s 325 employees have remained with the company. PARTNER ASSESSMENT has about 250 employees in 24 offices. 7 former Birdsall executives pleaded not guilty on “pay to play” charges.

Ugly huh?

As a resident of New Jersey, an advocate for economic development, a growth strategist focused on privately held midsized companies, and a long time board member for the New Jersey State Chamber of Commerce…the story generates mixed feelings for me.  Plus FELLOW level training from the National Association of Corporate Directors (NACD) and my experience as a board member leaves me asking questions.

  • Who was serving on the BIRDSALL GROUP board of directors? 
  • What was the board’s role?
  • If the leaders of the company were actually trying to circumvent government regulations related to political contributions, were their board members aware?  Informed? In agreement? involved?
  • Had anyone asked the tough questions?

I can just hear many peoples’ response reading my questions.  “How naïve is she?  Of course they knew!  Come on, the company is based in New Jersey.”  Folks, I have seen many changes and a great deal of progress in New Jersey despite this state’s challenges. You cannot automatically assume that the board was fully informed or involved.

Plus, this blog is about growing companies, not NJ politics.  Many privately held companies have no independent board members. Ask yourself if your board (if it exists) would have asked tough questions about how your firm is winning big government contracts?  Would you have welcomed the candid discussion about the pros and cons of testing the limits of what has been “normal for years” versus fully legal and ethical? Who sits on your board? People who have agreed with whatever you want to do?

A review of a company’s ethics is in my own due diligence when I am vetted as a possible board member. When it comes to engineering firms in any state, I would know to ask how the firm approaches the role of township engineer and interacts with politicians. Those are early questions in that process.

  • So am I a more prepared and appropriate board member for your privately held company if I had never been invited to serve on BIRDSALL’s board?  Accepted the invitation, spoke up, and had to resign?


  •   Would I be a qualified board member for your midsized company if I had served on the Birdsall board as it grew and was still active as the government charges started to come in?

Growth. Wealth. Success.  It’s all pretty intoxicating. If the growth and success of your business led you to consider unethical or illegal approaches, would your board be able to prevent what happened to the Birdsall Group?

Growth Strategy Tip


If you're interested in growing, what you have in Ambler is someone who specializes in "Growth" not a general business consultant or coach.

Daniel J. Haurey
President and CEO of Exigent Technologies LLC

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