I have seen few posts where the buyer works for few months in the company that he would like to buy. I believe this could be highly beneficial for seller and buyer because you able to evaluate in depth if there is a good match. Please share if you have been involved in such kind of transactions. How common are they? What kind of contract or LOI is signed?
Working to buy
by a searcher from University of Houston
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If you are going into this situation, you need to spell it out clearly that you are the president and you are looking to better the company. Therefore, you are now the de facto owner of the company. Decisions need to be agreed upon, before any employment contract is signed, and explicitly stated how they will happen. Moreover, you will need free reign over all aspects of the business - Meeting clients, suppliers, etc. You are to be at every meeting and take the reigns.
I made a few mistakes, and those are some of them. The owner wouldn't give up their control over the sales, which is one of the things that led to my parting ways. I am very methodical in how I do sales and I began micro managing the national sales manager, wanting to know exactly what kind of activities, contacts, and other metrics. The COO and owner told me to be nicer and let the owner do this job. That was a mistake.
I also made the mistake of not coming in with a specific plan to follow. I let the owner dictate how the mentoring and transition was going to look like. This was going to be the company I was going to run, so I should've entered as though I was running it - not the other way around.
The owner was very hesitant to implement many of my ideas. This company was literally from the 1970s. They had about 4 type writers and triplicate copies of everything. Each had its file that had back up on back up. So, I learned how to do business from the 1970s. However, I wanted to modernize everything and digitize everything. The issue is that the owner would constantly say, "that doesn't work, we've tried it". When digging deeper, when they tried it, the .pdf's would come up too slowly on their computer, where the paper files were readily accessable. I asked when they tried implementing digitization###-###-#### So, yeah, pdf's would've loaded much slower back then.
So, have a clear plan put in place, have it written out, go in as if you are the boss, and expect pushback from the owner. I would say that having an owner out within 3-6 months would be best, depending on the reason why they are leaving and the type of person they are. That said, it may be essential to have them on for a full year and have them transition their relationships to you. But, you are coming in as the CEO/Owner... That is a MUST.