Facts Hard to Face
The Richards Company and its former
owners are exemplary in their growing,
positioning and selling a closely held
business. Conversely, many business
founders find it difficult to acknowledge
and forthrightly plan for their eventual de-
parture. Consciously or unconsciously,
many resist the recognition that their per-
sonal leadership assets may no longer be
best for their expanding enterprise.
Developmental Stages
of a Successful Business
When addressing the intricacies of posi-
tioning a company for succession, it’s es-
sential to understand foundations.
Winning businesses generally go through
a life cycle. Let’s look at each phase:
Origin –
A business at its origin looks
“Tomorrow is uncertain, he affirmed.
What we have today makes us ready
for that uncertainty.”
nothing like it will at maturity. In making this
journey, each owner’s dream and stated
mission will be continuously challenged by
realities (operational and market).
• Advice: In this phase, as the new en-
terprise is conceived, there should be a
plan for how to build it into a business;
• Caveat: Yet for embryonic companies
consumed by mission, the more imme-
diate focus is commonly on designing
offerings and then figuring out the steps
to position introduction;
• Game Plan: To reach a sustainable
operation, companies need to look
A Textbook Example
Berkshire Hathaway is a highly acquisitive business, among the most emulated. In evalu-
ating an acquisition target, regardless of size, it will consider a business that:
• Meets the earnings requirements;
• Demonstrates consistent earning power;
• Shows good return on equity while employing little or no debt;
• Is not overly complex from a technology standpoint;
• Comes with an offering price from the owner; and
• Comes with good management in place.
By focusing on good management, a business owner is best positioned to achieve the
first five by addressing the last.
Berkshire Hathaway Chairman Warren Buffet is famous for affirming that, “We look for first-
class businesses accompanied by first-class management.”
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