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Case Study – PEOPLE Increase Business Value

By Roger Bibby of Avocet Investmentavocet-logo-2

As a broker selling businesses on behalf of retiring SME Owners, I am continually struck by an Owner’s indifference to the People aspect of their business- to his or her cost !
Whilst running a SME often means a lean machine, it does NOT have to mean ill informed, ill equipped, under skilled or under ambitious Management.
Without a competent & motivated Management Team , many Owners never achieve the true potential for their business & have little to sell for a lifetime’s work, as the inherent value of their business lies with them- the very person who wants to get out & retire!

Of course having a good Management Team not only helps increase business value, but it also:
– helps an ageing & possibly tiring Owner start to redress his business/domestic lifestyle balance.
– provides options for who to sell to: either a Trade Sale or a Management Buy Out

Addressing the issue of a weak Management Team through Recruitment, can be a speculative process if undertaken without proper attention to the Job Description for a vacancy, & the Recruitment specialist hired for the recruitment process:
The two most common recipes for disaster are:
– hiring the ”mud against the wall” Agency which is only interested in its 20% plus commission & rather like a bad estate agent sending you details of bungalows when you want a house, only generates candidates on its books for consideration, whether they are relevant or not;
– an Owner meeting the “ideal person” in a pub & deciding to recruit them
To illustrate the point behind these comments, Avocet was recently Instructed to help a highly profitable £5m annual sales business with the 60 year old owner’s Exit Strategy.

A quick examination revealed that the 4 person Management Team was composed of 2 at retirement age & 2 close family, with a clear need for a new position to allow the owner to slow down.
Through clear thinking & clinical decision making, Avocet in collaboration with SYLO Associates Ltd, is quarter by quarter addressing the recruitment needs exposed by this situation.
Already one of the retirement age managers has been successfully replaced, inviting the comment from the owner of
“I should have addressed this years ago!”

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