Firms often think that the best and only option for succession comes externally. However, COVID-19 may have actually created conditions that make internal succession much more promising—especially if you have the right talent in place.
Those successors will still want appealing terms and conditions to buy in, so here are some cards you can play to sweeten the pot.
Control and flexibility. A lasting impact of the pandemic will be flexibility (hours, levels and location). Becoming a Partner affords more say in flexibility and brings more privileges. Many people don’t want to be locked into a routine and the added responsibilities of ownership; now may be the time to approach part-timers who want flexibility.
Pricing. Often, people are buyers at the right price and terms. Dropping the price because of COVID will stimulate people motivated by price. Consider lower pricing for people who buy at a certain stage. Compensation is not expected to grow in tough times, so controlling comp with motivation to grow profitability and efficiency can bring buyers to the table.
Security. Partners are less vulnerable to dismissal. Uncertainty is a hallmark of the COVID conditions, making things more certain is everyone’s best interest. Consider creating near term comfort by providing a put option to buy back the interest within a window for what they paid.
Transparency. Many are reticent to explore ownership because they aren’t privy to financial and performance data. During the pandemic, firms that include senior employees in decisions and metrics have fared well. Transparency will take the anxiety down and it is essential for a successful partnership.
The pandemic has set the stage for a compelling and successful dialogue with candidates for internal succession. Let potential partners know that getting through hard times is the mark of strong partnership. Provide a real seat at the table. Start early and be real about making their influence count to build trust.
Those successors will still want appealing terms and conditions to buy in, so here are some cards you can play to sweeten the pot.