The President of the privately held midsized company was ambitious. JIM viewed himself as quite entrepreneurial. He envisioned acquisitions in their future and eventually a rather large liquidity event when a major corporation would buy his multi-location enterprise so he could move onto his next great adventure.
JIM was impressed with himself when he brought a CFO onto his executive team before competitors in his industry tended to do so. The CFO could play a role in banking relationships, help obtain growth financing, run scenarios as new products were considered, and lead the valuation process when acquisitions were in play. At least JIM wasn’t expecting GEORGE, the CFO, to process payroll or handle accounts receivable and account payable.
OK. So on the surface, it sounds like the company had fairly clear growth and exit strategies, even if they hadn’t been fully articulated to everyone involved. But it didn’t feel that way for the members of JIM’S executive team on a daily basis.
Like many mid-sized companies, the leadership got lost putting out fires. A major proposal wouldn’t just involve the sales department, JIM had his hands in the process, and the accounting department would be expected to “crunch numbers.” Pricing was always an issue. Figuring out which incentives would encourage key people to stay was constantly put on the back burner. Most of the executives were becoming convinced that they would never have an equity stake.
Then, all of a sudden, an opportunity for an acquisition surfaced. GEORGE was asked to lead the valuation and due diligence processes. Not surprisingly, the negotiations fell apart for this and the next acquisition that was considered. No deals were struck and JIM looked to GEORGE as the CFO for explanations. Let me give you a hint. If you think differing valuations can derail mergers or acquisitions, try negotiating when your key executives don’t sense job security. Why should key people at the acquired company trust the acquiring company?
GEORGE left JIM for a better paying position with a larger company. It was interesting to see how his replacement approached the position and handled JIM differently right from the beginning. SAM asked a great deal of questions early in his tenure and helped JIM solidify the visionary plan. Its success would depend on some transformational changes in the company so they could be better prepared to be the acquirer and not the acquired. They couldn’t keep operating day to day and expect transformational results. SAM negotiated with JIM and was assigned key transformational tasks that included executive compensation and incentives, succession planning, stabilization of budgets, pricing, cash flow, reserves, debt service, etc. And then SAM helped JIM quantify what was meant by “large liquidity event.”
The company was eventually sold for far more than JIM had envisioned. It turned out that SAM was a bit more visionary than JIM had been.
“JIM, tell me what you need” was replaced by “JIM, let me show you something we need to do together to make that happen.”
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.