How a Strong Team Influences the Value of Your Business

By Generational Group


After reading Joe Galvin’s recent article on Vistage, ‘4 ways to future-proof your hiring and retention strategy’, I started thinking about how valuable employees are and how they impact the worth of companies. Currently, millions of organizations are struggling to entice excellent candidates.

To get top talent onboard during such a difficult time, more and more firms are choosing to “acqui-hire” – a practice where companies are pursued primarily for the skills and expertise of their employees.

What does this mean for you as a business owner? Strong teams are a valuable commodity that buyers are paying a premium for. If an investor is not convinced by the capabilities of your employees to carry your company forward when you depart, it can limit your chances of securing a premium offer.

To give your business a head start, invest in your managers.

How Robust Middle Management Influences Company Value

Middle management is one of the most crucial layers in any organization. They are the glue between sweeping high-level strategy and day-to-day operation that allows companies to achieve great things.

Without their expertise bonding every facet of the business together, relationships break down, communication grinds to a halt, and deadlines are missed.

However, the value of good middle management isn’t just crucial to the success of your business today – it’s something that buyers are prepared to pay top dollar for.

Why? Two words. Owner dependency. Simply put, when middle management lacks drive or influence, it falls to the business owner to steer the company from success to success.

While this might work in the short term, the future of the company becomes cloaked in uncertainty when the owner leaves. If they were an indispensable cog in the machine, can it continue to function when they are removed?

Owner-dependent companies are huge red flags for buyers. A company that offers no reassurance that it can operate effectively in the absence of the owner cannot be expected to deliver the returns a new stakeholder will anticipate. Remember, buyers are always acquiring your company’s future – not its past or present.

How to Build a Strong Middle Management Team

So, to solidify the value of your business in the short and long-term, it’s crucial you invest in building a strong and capable middle management team. Here are three ways you can enhance your employees’ expertise to assure future investors.

Create a Long-term Hiring Plan

To get the right managers onboard, assemble a long-term hiring plan. By considering the goals you want to achieve and the capital available, you can better understand who the ideal applicant is, and how you can attract them with the resources available.

Approaching talent impulsively in such a competitive market is a recipe for failure. By having a long-term strategy in place, you can be confident in pursuing the skills and expertise needed and convince candidates that you have a vision for their growth in the business.

For more on recruitment techniques and strategies, read these 4 tips for hiring top talent in a tight labor market.

Mentor and Train Staff

Every company is unique. A manager that may have been exceptional in one business will likely need to adapt to the specificities of your operations.

For this reason, it’s crucial you devote time and resources to training new and existing staff to give them the skills to succeed without your guidance.

Foster Mutual Trust and Cooperation

To ensure your middle managers are up to the task of carrying your legacy into the future after you step down, it’s vital they are familiar with the inner workings of the entire organization.

You should be able to take time off with confidence, knowing your managers are equipped to keep everything running smoothly in your absence. If you lack the confidence that your company can operate without you at the helm 24/7, then a buyer probably won’t have that confidence either.

If you are concerned owner dependence may compromise the potential of your future exit, here are some helpful ways to reduce your company’s reliance on you.

Ready Your Team for an Optimal Exit

Our strategists at Generational Consulting Group can help you and your team prep for an optimal exit. Working closely with you and your associates, we evaluate the existing skills and capabilities of your team (and yourself), and what steps can be taken to help your employees improve their performance and become more autonomous in their roles.

This, along with several other proposals within our comprehensive strategic growth plans, can be the key to enhancing the performance and value of your company. This creates an ideal platform to maximize your exit plans.

With decades of successful experience, our talented professionals at Generational Group help you navigate the complex world of M&A, from initial evaluation to final sale.

For more insight on how to achieve an optimal exit, register to attend a complimentary Growth and Exit Planning Conference near you. Or, you can check out more in-depth information in our regularly updated Insights.