In today’s dynamic and ever-evolving business landscape, change is the only constant. It’s crucial to regularly assess the state of our businesses and evaluate whether a change in ownership is necessary or beneficial. While the decision to change business ownership can be daunting. It can also present numerous advantages and opportunities for growth and success.
In this article, I will explore fifteen compelling reasons why changing business ownership might be the right move for you. Whether you’re a small business owner looking to take your venture to new heights or seeking fresh challenges. These reasons will shed light on the potential benefits that can arise from a change in ownership.
- New Direction and Strategy
- More Money to Grow
- Better Skills and Expertise
- Succession Planning
- Global Expansion
- Industry Insights and Connections
- Improving How Things Work
- Reducing Risks
- Cultural Refresh
- Owner Dies Unexpectedly
- Unexpected Offers Come Along
- An Owner Divorces
- Business Reversals
- Lack of Estate Tax Planning
- Personal Growth and New Challenges
- Conclusion
New Direction and Strategy
Changing business ownership allows for a realignment of strategic goals and objectives. New owners bring fresh perspectives and expertise, which can help reshape the business’s direction and focus. This can lead to enhanced competitiveness, improved market positioning, and increased profitability.
Example
One real-life example of changing business ownership leading to a new direction and strategy is the acquisition of Instagram by Facebook. When Facebook acquired Instagram in 2012. It brought in new owners with a different perspective on social media and photo-sharing platforms.
More Money to Grow
Bringing in new owners can inject much-needed capital into the business. This financial infusion can be used for various purposes, such as expanding operations or entering new markets. Increased financial resources can fuel growth and enable the business to seize opportunities that were previously out of reach.
Example
A real-life example of changing business ownership to obtain more money for growth is the acquisition of Whole Foods Market by Amazon. In 2017, Amazon acquired Whole Foods Market, a high-end grocery chain known for organic and natural products. With the acquisition, Whole Foods Market gained access to Amazon’s vast financial resources. This infusion of capital allowed Whole Foods to expand its operations, invest in new technologies, and explore new markets.
Better Skills and Expertise
Change in ownership presents an opportunity to bring in individuals with complementary skill sets. New owners with expertise in areas can fill gaps in the existing team and strengthen the overall capabilities of the business. This can lead to improved efficiency, innovation, and overall performance.
Example
A real-life example of changing business ownership to bring in individuals with complementary skill sets is the acquisition of Pixar Animation Studios by The Walt Disney Company. When Disney acquired Pixar in 2006. It brought in new owners with expertise in traditional animation, theme park operations, and global distribution. These new owners filled gaps in the existing team and strengthened the overall capabilities of both companies.
Succession Planning
Change in business ownership can be a deliberate step in succession planning. If the current owner is nearing retirement or transferring ownership to a new generation of competent successors ensures a smooth transition and the continuity of the business. This allows for the preservation of the business’s legacy and avoids potential disruptions.
Example
A real-life example of a change in business ownership as part of succession planning is the case of Ford Motor Company. In 1979, Henry Ford II, the grandson of Henry Ford, passed the torch to Philip Caldwell, who became the first non-family member to lead the company. This transition marked a strategic move in succession planning, allowing for the preservation of the Company’s legacy and avoiding potential disruptions.
Global Expansion
Changing ownership can provide the impetus for global expansion. New owners may have a broader international network, market knowledge, or resources to support the business’s expansion into new geographic regions. This can open up new revenue streams, access to larger customer bases, and exposure to diverse markets.
Example
The acquisition of Jaguar Land Rover (JLR) by Tata Motors serves as a real-life example of a domestic company changing ownership to facilitate global expansion. JLR, a renowned British automotive manufacturer known for its luxury vehicles, was acquired by Tata Motors, an Indian automotive company, in 2008. This change in ownership provided JLR with the resources and expertise necessary for global expansion.
Industry Insights and Connections
Entering into a partnership or selling the business to owners with deep industry knowledge can provide valuable insights and connections. These owners bring industry-specific experience, contacts, and market intelligence that can help the business navigate challenges, identify emerging trends, and stay ahead of the competition.
Example
A real-life example of changing business ownership to gain industry insights and connections is the acquisition of LinkedIn by Microsoft. LinkedIn, a professional networking platform, was acquired by Microsoft in 2016. This change in ownership allowed LinkedIn to benefit from Microsoft’s extensive industry knowledge and connections.
Improving How Things Work
New owners can initiate operational restructuring to improve efficiency and streamline processes. They may introduce new technologies, implement better systems, or optimize the supply chain, leading to cost savings, increased productivity, and improved customer satisfaction.
Example
A real-life example of changing business ownership to improve operational efficiency is the acquisition of Marvel Entertainment by The Walt Disney Company. Before the acquisition, Marvel Entertainment had established itself as a successful comic book publisher and creator of iconic superhero characters such as Iron Man, Spider-Man, and the Avengers. When Disney acquired Marvel in 2009, new owners took the opportunity to initiate operational improvements. Disney introduced new technologies, implemented better systems for content production and distribution, and optimized the supply chain to support Marvel’s merchandise and licensing operations.
Reducing Risks
Changing business ownership can help mitigate risks by diversifying ownership and sharing responsibilities. This can reduce the burden on a single individual and spread the risk among multiple owners. Additionally, new owners may bring different perspectives and risk management strategies, enhancing the business’s ability to anticipate and address potential challenges. However, changing ownership can also introduce new risks and uncertainties.
Example
A real-life example of changing business ownership to reduce risks is the partnership formed between General Electric (GE) and Safran in the aircraft engine manufacturing industry. In 2008, GE and Safran joined forces to establish CFM International, a 50/50 joint venture aimed at developing and producing high-performance aircraft engines. The partnership was formed to mitigate risks associated with research, development, and production in the highly competitive aviation industry.
Cultural Refresh
A change in ownership can breathe new life into the business’s culture and work environment. Different owners may have distinct values, management styles, and approaches to leadership, fostering a renewed sense of motivation and enthusiasm among employees. This can improve morale, teamwork, and employee retention.
Owner Dies Unexpectedly
When a primary owner dies unexpectedly, it can trigger a change in business ownership. This sudden loss can disrupt the stability and continuity of the business, potentially leading to uncertainty among employees, customers, and stakeholders. The transition to new ownership requires careful planning and communication to ensure a smooth transfer of leadership and responsibilities. It also maintains the business’s operations and relationships.
Unexpected Offers Come Along
When unexpected offers come along, it means that someone expresses interest in buying or partnering with the business. These offers can bring exciting opportunities, such as financial gains, synergies with the acquiring party, or personal growth. Considering these unexpected offers involves evaluating the potential benefits and risks, which can lead to new horizons like expanding the business, entering new markets, or pursuing new entrepreneurial ventures.
Example
A real-life example of unexpected offers leading to a change in business ownership is the acquisition of WhatsApp by Facebook. WhatsApp, a popular messaging app, received an unexpected offer from Facebook in 2014. The offer presented an exciting opportunity for WhatsApp’s founders and owners. The acquisition brought significant financial gains as Facebook acquired the company for a substantial amount.
An Owner Divorces
Divorce can create complications for a business, particularly if both spouses are owners. Divorce proceedings often involve the division of assets, including business interests, which can have a significant impact on the business’s ownership structure. This change may require the transfer of ownership shares or the reorganization of the business to accommodate the new ownership arrangement. Changing ownership helps navigate the division of assets, protecting the business’s stability and allowing each party to move forward separately.
Business Reversals
Businesses experience ups and downs, and facing significant reversals can be challenging. Changing ownership offers a chance to reassess strategies, implement new approaches, and adapt to overcome difficulties, repositioning the business for success.
Example
One real-life example of changing business ownership due to business reversals is the acquisition of Motorola Mobility by Google. Motorola Mobility, a renowned mobile phone manufacturer, experienced significant business reversals in the early 2010s. The company struggled to compete with emerging smartphone manufacturers and faced declining market share and financial losses.
Lack of Estate Tax Planning
Insufficient estate tax planning can burden heirs or beneficiaries with significant financial obligations. Changing ownership strategically addresses these tax concerns, ensuring a smooth transfer of the business while preserving its value for future generations. However, it does not guarantee a smooth transfer or preservation of the business’s value.
Personal Growth and New Challenges
A change in business ownership can provide an opportunity for personal growth and exploration of new challenges. It allows them to exit the business on a high note, and pursue other interests or entrepreneurial ventures. It can be a chance for self-reflection, reinvention, and the start of a new chapter in their professional journey.
Conclusion
Changing business ownership can bring about a multitude of benefits and opportunities. From strategic realignment and financial infusion to skill set enhancement and personal growth, each reason outlined here presents compelling justifications for considering a change in business ownership. By embracing change, entrepreneurs can propel their businesses forward, adapt to evolving market dynamics, and position themselves for long-term success.