“Surrounding yourself with quality people whose skills are different from yours is a cornerstone of a successful sale.”

If you want to raise the value of your business and give yourself the edge over another company a buyer may be looking at, concentrate on creating a secure, talented management team. That one aspect alone will garner greater value, ensure continuity, encourage future growth, keep your company’s reputation intact, and illustrate a healthy corporate culture.

A Loyal, Skilled Management Team Motivated to Stay on After the Sale Reduces Buyer Risk and Raises Value

One of the most integral, if little thought of, value drivers is people power, in particular, your management team. A business with a solid succession plan comprised of skilled executives incentivized—with either short- or long-term financial incentives depending on your timeframe—to stay on in their roles after the current owner has ridden off into the sunset is a highly attractive prospect to any buyer.

Not only is your management team necessary for specific responsibilities and day-to-day accountability, but they’re also central to the sale process. While you, as the owner, handle most of the details and negotiations, you’ll still need to rely on their expertise to guide you through the process, and certain positions in particular.

“…a prospective buyer will ask what the current management team brings to the transaction.”

A team of leaders with defined management responsibilities and accountability whose loyalty lies with the company, not the owner, and who will continue to bring in revenue will enhance the value of the company to buyers.

A Competent, Cohesive Management Team Is the Foundation of Future Growth in a New Buyers Hands

A well-oiled, established management team is invaluable because it takes time and effort to find just the right people—and just the right people to work together. A cohesive management team that will stay together after a sale is priceless because it will ensure not only continued success but future growth. As they say in the investment banking business:

“Great management teams are worth their weight in gold because no matter what happens, they find a way to win.”

In most negotiations over sale price, the buyer goes into it not expecting future cash flow to match the current, let alone surpass it. But if you’ve taken the time to assemble a quality senior management team who already run the business and are ready and willing to continue to do so after the sale, a buyer will have far more confidence in the team’s ability to grow the business, resulting in less risk, more value, and a higher price.

Jack Welch, the former CEO of General Electric, determined succession planning to be one of his greatest accomplishments during his time at the helm. As an owner trying to attract the best price for your business, you should also treat establishing a management team in preparation for your departure with the same seriousness.

One last bonus of maintaining solid, stable management is that it highlights a healthy corporate culture. The staff takes their cue from their leadership, and any dissent, fear, or ill will results in an unhealthy atmosphere felt by employees. Toxic corporate culture generally results in high employee turnover, and because buyers will look at that closely during due diligence, that could easily negatively affect your company’s value.

When you invest in your management team, you invest in your company, and you invest in its future—and yours.