HR Strategies to Make Your Business More Salable
PBO Advisory Group’s Consulting Chief People Officer Nicole Devine was invited by the Association for Corporate Growth to serve on a panel discussing “how to make your business more salable.” Nicole provided answers to a series of questions, and we are proud to share her insight.
Q. How can HR issues add or detract from the value of a business?
A. To increase value, it is critical that you understand that your people are your intellectual capital that drives the business. HR policies should be centered on this, in combination with compliance issues.
Succession planning also builds value and is attractive to potential buyers.
Examine your entire employment brand – you have one even if you think you don’t! An employee brand is not much different from a company brand. It is how your employees feel about their experience with the company from hire to exit. A positive brand brings higher value. The employee brand is projected into the community also. People want to do business with companies that treat employees well.
Q. What is one thing that makes a company more sellable?
A. Align your people practices with your business practices, whether you are selling or not. If you are looking to be acquired, start early. It’s better to have a track record versus policies built just for a sale. Work hard to attract and keep employees. Employee lifecycle trackers are a good tool to document processes and practices to show what adds value in terms of employee retention.
Q. What are some compensation strategies to keep key employees pre- and post-sale?
A. The most common strategy is a “pay-to-stay” incentive program for key players. Also, phantom stock options and equity plays are good. What strategy you use depends upon the transition and how critical key employees staying can be. Remember, it isn’t just key leadership. You could also consider strategies for primary drivers on the sales team, HR team and others.
Enhanced severance strategies are also a good solution. These reward employees for staying though the transaction but then compensates them if ultimately they are let go. If the employee is asked to stay after the transition, the buyer is rewarded with an employee who has done a good job.
These are short-term solutions, however.
A longer-term strategy is to convey to employees what the combined culture of the old and new companies will look like, branded in a way that all employees will understand. This should be conveyed in a way that communicates the human impact so all employees will have an understanding of what their new experiences will be.
Q. Should a business owner negotiate the sale of their business?
A. The blood, sweat, and tears of building a business can have an emotional impact and cloud judgment. Outside advisors working on a sale will balance this. Succession planning that calls for key leadership to assume a role in running the business helps take away the risk of the owner getting wrapped up in the deal. A company will likely lose value if an owner is distracted with the sale and isn’t being run properly.
Q. Tells us about a deal that you are particularly proud of.
A. In one recent engagement, we were brought in prior to the transaction. We handle the reorganization design to expedite succession planning and new leadership roles to show more efficiencies, especially as the pandemic had shifted operations and the company was dealing with remote workforce issues. We were able to reposition, redesign, and execute quickly. This demonstrated to buyers that the company could adapt and continue to be successful, and that leadership could forecast and navigate through it.
If you’d like more information or have additional questions for Nicole, feel free to contact her.
Nicole Devine
Consulting Chief People Officer
nicole@pboadvisory.com
858-622-1681 Ext. 287