2024 Pacific Lake Conference: Two Roads Diverged...
When a strategic buyer calls – it can be a good idea to listen. In both cases, an unsolicited offer from a strategic buyer catalyzed the process and opened the door for good discussions with the board. But be aware that considering an offer can quickly change your internal calculus on risk taking and its important to have a thoughtful process to achieve the desired outcome.
Navigating this process takes time and will take CEO time away from the day-to-day business. Strong business performance during any process is critical and having a great team in place gives the CEO more space to consider and evaluate options. The process for both Sarah and Ryan took over a year, so having a strong team in place ahead of time enabled them to balance the needs of the business and the needs of other stakeholders (employees, investors, etc.).
Lean into support from the board – but it’s ok to feel uncertain or anxious as you navigate these conversations. Shoot for an open dialogue with your Board well before you kick off a ‘decision making process’ – and be clear with the Board about where you are and where you need help. The board members have likely been through this before and want to help, but it’s on the CEO to manage the discussion and to keep things moving forward.
Expect to manage the logical and emotional components of the decision process. Evaluating the decision to sell or build long-term will require both IQ and EQ, so be willing to use both. A logical underwriting process and evaluation of near-term business prospects is a helpful and needed component, but answering the question “what do you want to do” requires internal reflection and clarity that doesn’t come from a spreadsheet.
Options for search CEOs have expanded – and some common reasons that forced CEOs to sell in the past can be solved in new ways. In the past, things like personal liquidity and role changes for the CEO were tied directly to selling the company. Both Ryan and Sarah shared how they navigated these challenges without a requirement to sell, and how it allowed them to refocus on making the right long-term decision.
Finally, the conversation demonstrated that both paths can create an optimal outcome – and that the community of investors, board members and search CEOs can work together to navigate the decision process.
