Post close transition and knowledge transfer
November 01, 2024
by a searcher from Charles Sturt University in New Jersey, USA
Hello all,
I just closed on a home services business deal and one of the things I am facing is that the Seller is very knowledgeable and has a lot of experience in the industry. He gets called on by customers and employees for everything and he provides quick guidance using his experience which is valued by all. This makes me nervous as I do not possess remotely close technical knowledge as he does and we are in transition so he will not be continuing with the business. Now, I know that this is a very common situation for the majority of the searchfund acquisitions. So I am curious about how fellow searchers have handled this type of situation post-close. How do you ensure that the employees and customers come to you and how do you transition Seller's knowledge?
I appreciate your input here.
Thanks
from University of Pennsylvania in New York, NY, USA
You need to record everything. Pocket notebook always at hand. Write down words or phrases you don't recognize, get the definition, write them down. I have a "glossary" doc that is hundreds of rows long at this point. Take audio recordings of your 1:1 training /mentoring sessions with the seller, and re-listen to them.
Create a process map. Lots of placeholders to start, but eventually you'll be able to build a "How To" guide for every core process in your business. You want to have documented flows from Marketing to Sales, Sales to Operations, Operations to Billing, Billing to Collections, Interview to Onboarding to Training, etc.
VoIP is useful to get recordings and automated transcripts of all calls that come into the office. Start building the data you'll need to operate the business in a new way.
Every process in your company is like a little machine - you need to "cut a window into the side of it" so you can design it and fix it and monitor it, without needing to personally run it.
When my seller gets a call, he relies on what's in his head. When I get a call, I go to our project management system. This is a new way of working and you have to be very aggressive from the start at migrating everything you can into a structured format.
This is very difficult to do but the rewards are there in the long run for your team.
from University of Florida in Miami, FL, USA
First of all, you're going to be ok. I agree with all of the above comments - but also know that you don't need to know EVERYTHING that the old owner knows. Try to identify the core services and skills needed to run the business, and if he goes above and beyond in some areas that actually don't provide value to customers but are more of a time-sink.
If there are employees who are performing the same or a similar job as him, then you've already retained the knowledge. Who is his number 2 and what level is that guy at? Could he be willing to step up and take on more responsibilities by creating a training program for other employees?
If the owner sits on all the essential knowledge - it's very important to create a transition plan before he departs. If possible, have him stay on for a bit and try to shadow him and record him performing critical tasks. This can easily be turned into SOP's afterwards with the help of AI.
Maybe there's a way to keep him on as a paid consultant for a couple of months?
Either way, the priorities are this;
1. Clarify if the owner is the only one in the company with the critical knowledge required to operate the business
2. If yes, how much of the knowledge do you need to operate the business? What is the 20% of knowledge that makes up 80% of all daily decisions?
3. Identify how far "behind" the other employees are. There is usually a number 2 who knows ALMOST as much as the owner. Can they step up and act as a knowledge-beacon?
4. If no employees can step up - find a way to keep interacting with the owner until you've documented all critical information. Record and video as much as possible. This can be easily transcribed later and you won't miss important details.
5. Don't just transfer the knowledge to yourself (you're just creating a new key man risk) - take the opportunity to build proper SOP's and a knowledge sharing program, so that you can start working ON the business and don't get stuck working IN it.
Feel free to DM me if you need more specific advise! I work with post-acquisition integration and operator training and I'd be happy to help.