Why nailing the deal isn’t the same as making the most of it.
There’s a distinction in ownership change that the language we use keeps mashing together. People talk about “doing the EOT”, “completing the MBO”, “getting the deal away” – as if the day the documents are signed is the moment that matters most. For the businesses I’ve worked with, that day is the start of the work that matters, rather than the end of it. The way we talk about ownership change has a sneaky way of disguising that.
The transaction is an event. It has a date, a price, a set of legal documents, advisers in a room (or, more often these days, on a call), and a moment where money moves and shares change hands. The transition is the multi-year process of the business actually becoming something different under new ownership. The two get conflated regularly, and the work that determines whether the new ownership model actually delivers on its promise is almost entirely transition work.
Where the effort tends to land
If you look at where time, money and emotional energy go in a typical ownership change (whether it’s an EOT, MBO, PE deal, or family handover), there’s a fairly consistent pattern. A disproportionate amount goes into the transaction. Lawyers, tax advisers, financial DD, valuation work, structuring, negotiation, the SPA, the funding mechanism, the trust deed. All necessary. All carefully scoped. All with clear deliverables and a hard deadline that focuses minds.
Comparatively little tends to go into the transition. The leadership development that the next generation will need. The commercial and financial capability that the new accountable team has to build before they’re carrying the weight on their own. The operating rhythm that will need to replace the founders’ instinct. The governance frame that will hold the business steady as the founding team steps back.
These pieces of work don’t have a fixed deadline. They don’t have a price tag attached in the same way. And they don’t have a small army of specialists actively selling them in. So they tend to drift – which is a shame, because the value created or eroded in an ownership change is overwhelmingly a function of what happens in the transition.
Why the framing matters
There’s a version of this conversation where the answer is just “yes, of course you need a post-deal plan”. And there are plenty of post-deal plans out there: 100-day plans, integration plans, value creation plans. These are useful, and I’m not in the business of slagging them off. But a 100-day plan tends to be tactical and operational. What it usually doesn’t do is name the underlying question: is this business actually ready, today, to deliver the growth that justified the change of ownership in the first place?
That question is uncomfortable, because the honest answer is often “not yet”. And “not yet” sits awkwardly alongside the celebratory framing that tends to surround a completed deal. People have worked hard, paid for the advice, put their names on the documents. The last thing anyone wants to be told is that the real work is just starting – though it often is.
What gets exposed
Change of ownership doesn’t create weak foundations, but it does a remarkably efficient job of exposing them. The pressures of transition surface the things that were always a bit fragile but were being held together by the founding team’s presence, long-standing relationships, or sheer pattern recognition from people who’d been in the business for years.
The strategy that lived in the founders’ heads becomes something the wider leadership team has to take ownership of – reviewing it, revising it where needed, and building their own conviction in where the business is going. The financial information that was sufficient for one or two people to run the business has to be sufficient for a wider group of decision-makers. The relationships that won the last three big contracts have to be transferable to people who weren’t in the room when those relationships were built. The decisions that used to be made by a quick conversation between two people now have to be made by a leadership team that has worked out how it makes decisions together.
None of this is surprising once you say it out loud. But it doesn’t get the attention it deserves in the way most ownership transitions are planned. The transaction gets a project plan. The transition rarely does.
What ‘ready for transition’ looks like
The question that opens the most productive conversations isn’t whether the deal structure is right, or whether the valuation is fair, or whether the funding will hold (those things matter, and they’ll get appropriate advice). It’s the question about operational and commercial readiness.
What does it look like in practice? It’s the leadership team being able to read management accounts unsupported – and being able to tell, from the numbers, what’s actually happening in the business and where the pressure points are. It’s profit and cash being well-understood by everyone whose decisions affect either. It’s a real investment call being possible under pressure, with incomplete information, when the founders aren’t in the room. It’s a commercial conversation with a customer, a lender or an investor happening with credibility because the people in it genuinely understand the dynamics.
These aren’t unusually high bars – they’re a reasonable definition of what a business that’s ready to be run under new ownership looks like. They’re rarely tested honestly until well after the transition has already happened, which is exactly the point at which closing any gaps becomes significantly harder than it would have been before.
Where to start
The shorthand we use for this work at SWG is the Growth Foundations Assessment – eight foundations, thirty practices, looked at honestly with the leadership team rather than scored on a self-assessment form. It’s a conversation about evidence rather than confidence: what does the team actually do, where does pressure currently show up, and where might pressure show up under new ownership that isn’t showing up today?
You don’t have to use that framework specifically. But the conversation needs to happen – and to happen earlier than is currently the norm. The transaction will get its project plan. The transition deserves one too.
If the foundations aren’t strong enough for the business to thrive under new ownership, no amount of deal advisory will fix it on the way through. The transaction will complete. Whether the transition delivers on the promise of the deal is a different question, and one worth taking seriously. Happy to chat if it’s useful.