By: Aakash Shah
Your day-to-day as a CEO rarely leaves time to contemplate your legacy.
I spent twenty years growing my family’s chemical company from $3 million to $100 million in sales. In the midst of the daily grind, you’re usually way too busy strategizing your next move, growing your people, or putting out fires to think about what comes after. At least, that was the case for me.
Eventually, I realized the time came for me to try something new. I had the opportunity to sell my business in two parts to a private equity firm for a nine-figure exit. In the process, I learned a lot about what leadership means to me — and how I wanted to be remembered as I start my next venture.
Here’s a bit of what I’ve learned:
1. The CEO’s role is to set a clear purpose.
For a business to be successful, it must have a clear purpose and mission. What are you trying to achieve as a business?
Of course revenue is a part of that, but your “why” must go deeper for it to resonate. It should be clear, actionable, and ideally no more than one sentence long.
I’ll give you an example: Our company was in the chemical ingredients space. It was clear from the get-go that we wanted to be the trusted provider of leading edge, quality ingredients so that our customers could make the best possible products. Framing our purpose in this way made it possible to make every decision through this lens, and to know exactly why everyone (including me) showed up to work each day.
Your legacy is grounded in that purpose. Have you achieved what you set out to do, or not?
2. Your culture is made up of repeatable processes.
Everyone has a different leadership style. Mine is spending time with employees as much as possible, leading by example. Culture-building comes from doing the work, instilling a desire to serve customers and positive energy. That’s the legacy I want to build with my employees.
Part of that is setting up repeatable, scalable processes so that the company can continue to thrive even without you at the helm. You need to pick the one or two elements that matter the most — for our company, that meant an obsession with customer service as our key differentiator.
But anyone can say “customer service” is a key value. It’s the processes that give employees the autonomy to make the value come to life. For example, we always made sure to give every customer an order confirmation within 24 hours. Or it could be regular surveys of customers to understand what features or products they want next. What matters is setting up the technology and processes that allow those core tenets to continue to happen after you’re gone.
Those processes become a part of the DNA of your company — and will continue after you leave.
3. Communication smooths any transition.
For any transition, but especially a CEO exit or a sale, communication matters. You want to make sure you impart a sense of safety, security, and stability throughout the transition so your employees know that they’ll be taken care of in the future.
You want to have obsessive communication in times like these. Not meetings for the sake of meetings, but town halls, 1:1s with managers, and Q&A sessions can all be great communication tools. When we announced the sale of the company, we walked through why it happened, how it’s going to help the overall mission, and what it meant for different parts of the organization.
When it comes to your legacy, your employees will remember how you made them feel — especially at this critical moment in their careers. Regardless of what happens with the new owners or changing organization, you need to make sure they feel confident. For me, taking care of my people is always #1 on my list as CEO, and that didn’t change just because I was going to be leaving the company.
4. Pick the right partner.
Everyone always talks about how important it is to hire the right people in your organization. The same is true when you’re choosing your partner or your successor. If you really care about the legacy of your tenure and maintaining the culture you’ve built, it’s the partner that matters the most. You can’t just sell the business for the biggest check — you have to consider the company’s background, what their goal is for the business, and whether or not they share your values.
For me, as I looked to sell the company, the biggest part of the process was vetting potential buyers to see how they’ve handled family businesses in the past. Ask yourself:
- What do they do when they acquire a new business?
- Do they invest in growth or make cuts?
- How much capital do they currently have to work with? What does debt and financing structure look like?
- How much involvement will your partners have with you and your management team?
In today’s capital environment, there are so many options if you want to sell your business. A lot of people worry that if you ask too many questions or have too many terms and conditions that partners will run away, but it’s more important to have alignment and transparency moving forward. Ask those questions. Make sure that your partner is going to be involved to help take you to the next level, or to make sure the company remains successful in the future.
5. But you have to help your successor succeed.
Leaving my family business meant a lot to me personally. I knew I couldn’t walk away without the confidence that my successor would do well. I brought in the new CEO before I sold the business for that reason — I wanted to find the right person, not just any person, even though I wanted to leave to pursue other passions.
Doing this made for an intense process. But I wanted to make sure the new CEO could ask any questions, could see how we did things, and could begin to strategize and bring their own expertise to the table. Separating this transition into two parts between the sale and the new CEO helped provide continuity for our team, but also made sure we collaborated all together on the interim and long-term plans for success.
That doesn’t mean I was breathing down my new CEO’s neck. My job was to step back and observe, answer questions if needed, and help my team adjust. I gave them the space they needed to bring in their ideas and their approach for moving forward.
Another way to ensure the transition went smoothly was by negotiating that all management team members had a role going forward after the acquisition, that they would receive proper equity and compensation, and that they had a stake in what came next. The measure of a good leader is taking care of your team, and so it was important to me that everyone would come together and be ready for anything — even with me on the sidelines.
That’s what legacy looks like.
Build Your CEO Legacy
Leaving a company as CEO can be one of the most challenging moments of your tenure. If you’re gearing up for a sale, looking at private equity partners, or are on the cusp of a major transition, CEO Coaching International can help.
Our coaches are former CEOs, presidents, and executives who have led double-digit sales and profit growth in businesses ranging from startups to over $10 billion. Many of the CEO Coaching International coaches are founders that have led their companies through successful eight, nine, and ten-figure exits. They’ve been through it all, and they’re here to help you look to the future — and meet whatever challenges your business comes up against.
Listen to Aakash Shah’s podcast episode
4 Keys to Preparing Your Business for Sale to Private Equity
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average revenue CAGR of 31% (2.6X the U.S. average) and an average EBITDA CAGR of 52.3% (more than 5X the U.S. average).
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