Successfully Transitioning Significant Processes During Business Succession

When preparing to exit their business, many owners will need to hand off the tasks for which they have always been responsible.  It comes with the territory of owning and operating a company.  Owners face the challenge of effectively transitioning responsibilities to the next leaders of the organization.  Additionally, it is beneficial to owners to ensure that their processes create value in order to maximize potential sale price of the business. An approach needs to be followed to allow owners to identify processes with significant impact in order to avoid interruption of processes during ownership transition.

Identify Significant Processes

In order to best utilize their time, owners need to focus on the key areas of their business that are essential to operations, require their involvement, and address significant risks to the organization.  For example, payroll is a significant process that typically involves some level of involvement from owners or executives.  If employees are not paid, there is a risk of loss of workforce, which may result in the inability to operate the business.  Examples of areas that require owner time and are essential to successful day-to-day operations of the business include order-to-cash, procure-to-pay and payroll.

Assess Identified Processes

Once significant processes have been identified, owners will want to gain a deeper understanding of the people, processes and technology within each.   Assessing these three main aspects of key processes to understand existing procedures and what could go wrong within each area will help identify potential areas of risk, as well as opportunities for optimizing processes to gain efficiencies.  

Develop and Optimize

The assessment of significant processes may identify gaps or inefficiencies in an organization’s existing processes, which could create risk in transferring these responsibilities during the business transition.  Additionally, the more defined a process, the easier it is to transition.  Efficient and defined processes will result in strong control structure, which can add value in the sale of a business.  The following outcomes may result from the process assessment:

• Elimination of non-value-added tasks for efficiencies 
• Addition or standardization of processes and controls
• Implementation of technology, such as robotic process automation (RPA), for automation of processes and controls

Whether the exit strategy is selling the company or leaving a legacy for the next generation, improving organizational structure, functional processes and controls will prepare your organization for more successful due diligence with potential buyers or with a stronger company for the next generation of owners.  

Schneider Downs Risk Advisory Services (RAS) professionals can assist owners as they plan to exit their organization by acting as a strategic advisor to implement changes to the organization’s processes to achieve cost reductions and efficiencies, while also providing recommendations to better manage risk and strengthen control activities.