As CEO, you have worked hard to bring your company to where it is today. You have spent countless late nights and weekends striving to make the company a success. However, for one reason or another, you are moving on, and you may be considering utilizing an interim president to assist you through the succession process.
Whether you are handing off the company to a family member, selling the company to outside buyers or selling the company to employees (ESOP), a quarterback — such as an advisor or interim president — can help you make the right decisions during this challenging transition time.
There is a lot to think about in succession planning, and bringing in an advisor or interim president is like having an all-star quarterback on your team at the Super Bowl.
Why hire a quarterback?
There are many reasons you might choose to bring in a quarterback; just consider the following.
- You are simply burned out and need a break from the day-to-day responsibilities.
- The company's growth is stagnating.
- You no longer feel interested in the business and want to start a new venture.
- You are undecided about whether you will sell the company or keep it, so you need more time to think things through.
- The valuation of the company is not high enough to sell because of weaknesses in certain areas such as IT, finance, management or sales. This quarterback can help you strengthen these problem areas and get your company ready for sale.
Bringing in an advisor or interim president can help you in all these situations. But what value, exactly, can they bring to your team?
How a quarterback can help
The value an interim president can bring to your business cannot be emphasized enough.
According to CEO and board member Larry Putterman, who specializes in next-stage growth and competitive-advantage strategies, family businesses can benefit most from the assistance of an interim in the following ways. However, this doesn't just apply to family businesses. Interim presidents are just as valuable for privately owned companies, private equity and venture capitalist firms and startups.
1. They can provide guidance and a game plan
Ensuring the daily operations of your business continue to run smoothly is critical during the succession process, and an interim president can keep an eye on them while you work out the details of the transition.
According to Terry Davis, president and CEO of the American Association of State and Local History, an advisor or interim president can also "assess effectiveness of programs and their contribution to mission and/or financial health and the allocation of resources to various programs, sharpen decision making and shift priorities, and evaluate 'pet projects' of the staff and board that may be difficult for permanent leadership to challenge."
This extra streamlining of company finances and expenditures allows an easier transition and a fresh start under new leadership.
2. They can offer quality mentoring and coaching
According to Putterman, "An interim president can direct, nurture, guide, teach and build the next generation team," thus strengthening the skills of your team members for the future.
This is most advantageous if you find yourself burned out or losing interest in your business. Your interim president can provide the support and team building that may have been neglected.
3. They can build consensus
This applies primarily to family businesses. Henry Hutcheson, founder and president of the consulting group Family Business USA, says emotional factors can often negatively affect family companies during the succession process: "In a family-business situation, decisions on who will be the next CEO can be emotional and not attached to the business reality."
Family stakeholders often have conflicting desires, and any disagreements that arise can be volatile. An advisor or interim president can help by providing unbiased, objective advice. Hutcheson adds that it's "a good idea to bring in this outside quarterback who will look at the company's situation objectively. It can be a very tough and emotional decision to make, but ... this is a decision that must be made."
4. They can manage growth
This is especially relevant for startups. According to Putterman, "Entrepreneurs often hit a wall where they need someone with experience and unique skill sets to grow the business."
An interim CEO or president can be invaluable as a startup transitions. He/she can take over for the original CEO, who might be less experienced, to facilitate and promote a company's growth before and during the transitioning process.
5. They can assist with buying or selling
Putterman comments that an interim president can "scout companies in a particular field for merger or acquisition, stabilize after a sale or ready a company for sale." The interim president will likely have a larger set of connections outside of the company, which is a great advantage in acquisition or preparing to sell.
It is also important to note they can help stabilize a company directly after a sale, since outside interim presidents are typically good at dealing with crisis situations and can help mitigate the upheaval that occurs when a company changes its leadership.
6. They can strengthen areas of the company that are affecting the value of your company
Concerned the valuation of your business is less than you wanted? Interim presidents are good at quickly identifying and strengthening weak areas of the company that are hurting the valuation price of your business, thus helping you get a better price should you decide to sell.
Why this matters
Ensuring the succession process is steady and smooth is critical to your company's success. According to the U.S. Small Business Administration, two-thirds of family-owned businesses will not survive a leadership change. Any mistake can potentially harm the company's valuation, which took many years for you to build.
As you prepare for your next move, you must keep investors or shareholders confident that the company will continue to succeed without you. Ultimately, this quarterback can ensure every player keeps performing at his or her best, helping you to win the succession game.
