When a business is acquired, most of the attention goes to the transaction: valuation, due diligence, negotiation, and closing. But the leadership team—the people who built customer relationships, led employees, and worked alongside the owner for years—suddenly faces new reporting lines, new expectations, and often a very different culture. Preparing a leadership team for an acquisition means getting those leaders aligned on communication, decision-making, and accountability so the business keeps performing after ownership changes.
That makes leadership readiness an ExitReadiness® issue. A capable management team makes a business more valuable and more transferable, but a team that can run the business without its owner isn't automatically ready to work under a new one. The transaction transfers ownership; it doesn't transfer trust or alignment. A successful exit requires attention to both.
In this episode, Pat Ennis and Walter Deyhle talk with Betsy Kauffman, Founder and CEO of Cross Impact Coaching, about what leadership teams need to understand before, during, and after an acquisition—and what owners and buyers can do to protect the value that depends on those leaders.
Key Takeaways
Your leadership team has already been discussed. One of a buyer's first questions is "Tell me about your people." Perceptions of each leader are formed before the team ever meets the buyer.
Long-tenured leaders may be starting over. Under a new owner, even a 20-year veteran may need to show who they are, what they've done, and what their team can do.
Be transparent about the process, but careful about timing. Tell your leadership team you're exploring a sale, but don't parade every prospective buyer in front of them. Deals that fall through create uncertainty and fear.
Key-person flight can threaten the deal. If a top performer like a chief revenue officer signals they'll leave, buyers notice. Stay bonuses, well-written employment agreements, and phantom shares can help; buyers are often hesitant to offer equity early.
A Leadership Operating System rests on five things. Communication, collaboration, decision-making, focus (strategy), and execution determine how healthy a leadership team really is.
Leaders need a "first team" mindset. Teams that treat their peers, not their direct reports, as their primary team are more valuable to a buyer, who otherwise faces rebuilding or replacing them.
How leaders show up with buyers matters. Buyers are deciding in the moment whether to keep each leader. Curiosity, openness, and optimism signal commitment.
Vet the buyer, not just the price. A buyer's track record and intentions, whether private equity or an individual, will shape what happens to your people after closing.
Where to Start
Betsy's advice for each side of the transaction:
If you're the owner preparing to sell: Really vet the people looking to buy your company, and know your end goal for your team and employees. Do due diligence beyond the numbers: Who are these buyers, what are their plans, and will they take care of your people?
If you're on the leadership team that will remain: Be open-minded, be optimistic, and ask questions. Be a good team member and don't be difficult in how you show up. The buyer already has an intention for the team, and how you show up is critical.
Before you go to market: Take Betsy's free five-minute leadership alignment survey at crossimpact.co to see how your leadership team is operating and where to focus before an exit.
About Betsy Kauffman
Betsy Kauffman is the Founder and CEO of Cross Impact Coaching, an executive leadership coaching firm helping mid-market CEOs and senior leadership teams navigate acquisitions, rapid growth, technology adoption, and organizational transformation. With more than 25 years of experience leading large-scale transformations across Fortune 500 organizations, Betsy has seen firsthand how leadership misalignment can undermine even the best strategies. Her work focuses on helping organizations build a Leadership Operating System—shared behaviors, decision-making frameworks, and execution rhythms that enable leadership teams to function as one.
Betsy is a TED speaker whose talk, 4 Tips for Honest Conversations at Work, has received more than 1.6 million views. She serves on the advisory board of Exit Right Advisors and is the author of The Fix: A Business Fable for When Your People Aren't Broken, But Your System Is.
Connect with Betsy:
Cross Impact Coaching: crossimpact.co (includes her free leadership alignment survey)
Book: The Fix: A Business Fable for When Your People Aren't Broken, But Your System Is, available on Amazon and Barnes & Noble
LinkedIn: linkedin.com/in/betsykauffman
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Want guidance? ENNIS Legacy Partners helps business owners build more valuable, transferable businesses and prepare for successful transitions—on their terms and for their reasons. Visit ennislp.com or email email@ennislp.com.
Disclaimer: The information presented in this podcast is provided for educational purposes only. Neither the presenters nor ENNIS Legacy Partners are engaged to render legal, accounting, tax, or other professional services. Consult a qualified professional regarding your specific circumstances. ENNIS Legacy Partners assumes no legal liability for any loss related to the information contained in this presentation.
Full Episode Transcript
This transcript was generated automatically and lightly edited for readability. It may contain minor errors.
Hey there, this is Pat Ennis with ENNIS Legacy Partners. Welcome to the ExitReadiness® PODCAST. I'm here with co-host Walter Deyhle. Our mission here is to provide you, the business owner, with subject matter expertise on topics pertaining to building sellable business value and planning that eventual exit from the business. We want to help you build a business that's transferable and then help you exit successfully on your own terms and conditions. And today we're going to talk about what nobody tells leadership teams when they're being acquired.
When we talk about selling a business, much of the attention naturally goes to the transaction itself: the valuation, the numbers, the purchase price, due diligence, negotiations, and ultimately getting the deal closed. But there's another important part of the transaction that doesn't always receive the attention that it deserves and really needs, and that's what happens to the leadership team when the business changes hands.
Think about it. These are the people who have helped build and operate the business, developed relationships with customers and employees, provided leadership and management, and perhaps they've worked alongside the owner for decades. Now they're facing a significant transition, often with considerable uncertainty about what's going to happen in the future: future roles, responsibilities, reporting relationships, and most certainly the culture of the new organization. For some, the acquisition represents new opportunities. For others, it can create fear, anxiety, and uncertainty. And for the acquiring company, there's the challenge of bringing together people who may have very different leadership styles, cultural expectations, and ways of operating.
So the transaction may transfer ownership of the business, but it doesn't automatically create an aligned leadership team. That's an important distinction. From an ExitReadiness® perspective, we spend considerable time helping owners build businesses that can operate successfully without them, and a capable leadership team is essential to that goal. But preparing the leadership team to operate independently isn't necessarily the same as preparing them to navigate an acquisition and the changes that follow. So today we're going to explore what leadership teams need to understand before, during, and after an acquisition, and how the owner can help with that.
Joining us today, we're excited to have Betsy Kauffman. Betsy is the founder and CEO of Cross Impact Coaching, an executive leadership coaching firm that helps mid-market CEOs and senior leadership teams navigate complex organizational challenges like this one, including acquisitions, rapid growth, and major transformations of any kind. She brings more than 25 years of experience leading large-scale tech and organizational transformations across Fortune 500 companies in financial services, healthcare, insurance, and technology. She helps organizations develop what she calls a Leadership Operating System—we like that kind of language here—the shared behaviors, decision-making frameworks, and operating disciplines that help leadership teams function as one and in alignment. She's also a TED speaker, an advisory board member for Exit Right Advisors, and the author of The Fix: A Business Fable for When Your People Aren't Broken, But Your System Is. Betsy, welcome to the podcast. It's great to have you with us.
Thanks for having me. I'm super excited.
Hey Betsy, as Pat said, thanks for joining us. I'm going to start us off with the title of the episode. What are some of the things that leadership teams typically aren't told or aren't prepared for when their company is being acquired?
It's funny. I almost wonder if leaders within those teams know that they've already been discussed. When somebody's looking at acquiring a company, probably one of the first questions a potential buyer asks is, "Tell me about your leadership team. Tell me about your people. Who's strong, who do you have concerns with, who's going to grow with you?" So that buyer is coming in with potentially preconceived notions of the team itself and of individual leaders.
I think that awareness is pretty important. How does the owner, the person who's selling the company, actually view you as a leader and as a leadership team, and what are they telling this potential acquirer about you and your teams? That's the first thing: the conversation's already happened. Depending on what that seller thinks, you as a leadership team might have to do some work. How do we let this new person know who we are as a team and as leaders? What's our track record? If you've been with a company for a very long time, you're almost starting new. You might have to go through almost an interview process to say, "This is who I am, this is what I can do, this is what my teams can do, these are some of the patterns we have in place." So the first thing is to understand that the conversations have already happened and perceptions of you have already been formed, right, wrong, or indifferent. You have to step back and say, "Okay, now how do I either live into it or change that perception?"
That makes sense. And from the seller's perspective, you want to make your company sound good. Is there a temptation to build your people up a little bit?
I think so. There's potentially a "Hey, I've got this great team, they run without me, and you can just step right in," depending on what the buyer is looking for. If they're looking to buy a company and have it operate, you're definitely going to build up the leadership team. If they're looking to step into the company and actually run it, they might want to bring in some of their own folks, depending on their experience. As a seller, you're going to talk about your team honestly, and maybe say everybody's great and they're rocking and rolling, but there might actually be some potential changes needed, depending on where there have been missteps. If that buyer is very good in ops or finance or another area, they might want to bring in their own expertise and chops. So leadership teams need to understand who this person coming in to acquire the company is, what their specialties are, what their intents are, and then how we start to re-form as a team around this new owner.
Let me ask you a question about timing. It seems to me that in a perfect world, the leadership team would always be aware that the owner has a succession plan in place, because that gives them some comfort—maybe some anxiety, but probably more comfort. But a lot of owners aren't great about that kind of thing. What do you see as the best time for the owner to start letting the leadership team know his plans? One thing I imagine you want to be careful of is saying, "Hey, we've got somebody coming in to look at the company," knowing there's a chance it's not going to go forward.
It's a tricky one, and a lot of it depends on who's on your team. But as an owner, you definitely want to let the leadership team know, "I'm at a point where I'm going to start to look actively at potential buyers for the company." That's good awareness, along with what your plan is: "I won't put them in front of you until we get to a certain point in the process." I think it's critical to be that transparent as a seller.
I would also very much caution, to your point, Walter, about how early you bring folks in. If you're vetting three or four potential buyers, at what point do you say, "This is the person, this is where we're going to move forward"? I was actually working through an acquisition where they brought the entire team in to meet the potential buyers, and then the deal fell through. The owner had done that several times. So there was a lot of uncertainty: "Are you going to be the one who actually buys this business from us? What does that look like? Will I still have a job?" You have to manage that uncertainty and potential fear, and even the chaos and change that might come with it. So let them know where you are in the process—you're vetting folks, maybe you're under LOI and they're doing due diligence, the timeline looks like this—and as you get closer to a closing, put that buyer in front of them so they can ask questions.
The other thing is, do you want your leadership team involved in who actually buys? If you've got lots of folks coming at you and a really great business, do you have a couple of key folks on your leadership team you want to bring along on the journey? That's another thing a seller has to think about. We worked on a deal where we were very much tied in with the CFO. There were two owners and a CFO, and the CFO said, "I don't know that I'll stay with you after you acquire the company. I might exit as I'm getting older." Buyers are going to want to know transition times as well.
So it's tricky, because it depends on your leadership team. How do you think the deal will land? Will they stay? Could you have some real superstars who say, "I don't like this instability, and I'm going to leave"? That could also challenge the deal: "Wait, your chief revenue officer is going to leave? What are we going to do?" As a seller, you really need to understand your team and figure out what makes the most sense, how to bring in the right people, and what level of transparency they need based on the maturity and longevity of the team itself.
Betsy, on the issue you just mentioned—the potential for key people to leave, particularly those very involved with top line, operations, or profit—what have you seen in terms of strategies for keeping them around? What we've helped owners think through is stay bonuses, maybe equity, though hopefully not a lot of times, and well-written employment agreements. What other strategies have you seen?
I would say definitely employment agreements, and again the transparency: "If you stay for at least six months, we'll give you this bonus." Sometimes you see equity, but buyers are often a little hesitant to give equity until they get into the business, because they want to make sure these are the right folks for their new leadership team. Not saying it can't be done, but I haven't seen a lot of it—I don't know if you've seen that differently. But contracts, transparency, the employment agreement: "We'd love for you to stay for six months or 12 months," or "You're a very integral part of this company, you're going to stay on as a leadership team member, and you're one of the more critical folks we need to have in place." Having that conversation as the buyer is important.
We've seen phantom shares used effectively in that.
True.
Hey, listen. You've developed what you call a Leadership Operating System. Tell us about that. What does it mean, and how can it help a leadership team navigate changes?
When I go in and work with leadership teams, I usually see five things that determine how healthy a leadership team is and what systems or measures they put in place. I'm not talking about technology—there's always a technology side—but the first one is how well they communicate as a team. Do they understand each other and each other's communication styles, and do they have open and honest conversations?
The second one is collaboration. Do they respect each other? Do they work as peers? Do they collaborate and understand the good of the company? Or are we living in silos, where I'm going to worry about my folks and my downlines as opposed to working across?
The third one is decision-making. As a team, how well do we make decisions, and how well do we stick to them? I've seen it more often than not, and sometimes it's the founder or the owner. My husband owns a small company, and he struggles with decision-making. So how often do we make good decisions, hold true to them, and actually execute on them?
That goes into the fourth one, which you could call strategy—I call it focus. Do we have a good strategy that we're able to stay committed to and focus on, or are we always chasing shiny objects and changing our minds? It goes hand in hand with decision-making.
The fifth one is execution. It's great to have an amazing strategy, but if you can't execute on it, it doesn't matter. I've seen it more often than not: we spend two days on our annual or quarterly strategy, and then we can't execute it because we allow other things to come in and take over.
When you start to work on those five things as a team and have very intentional conversations about them, we find you have a very strong leadership team. So that's the operating system: how do you operate as a leadership team, and do you actually view yourselves as a team? Or do you look at your downlines as your primary team, as opposed to your peers? It's kind of the Patrick Lencioni "first team" concept. When you're thinking about selling your business, the way that team operates is critical. I think it's a key factor when someone's looking to buy your business: how well does your team work together, and am I going to need to spend a lot of time getting this team working together—or replacing it—because they haven't been intentional about how they come together?
How would that process differ from, let's say, EOS?
EOS is good, and there are some very similar concepts. What I don't know that EOS does is get very intentional about the team itself—the culture and the behaviors—as well as how to help each leader grow. EOS does really good work on strategy: the quarterlies, the rocks, all those pieces. But do you take the time to really focus on communication within your team? On collaboration? On decision-making? When I work with my teams, we take intentional time during our strategy sessions to say, "This is the area of the team we're going to develop this quarter, because we really need a better understanding of communication, or collaboration, or decision-making." I'll use the term "rock," which is the EOS term, but it's a different rock. There's usually some rock that's prohibiting the team from being a high-performing team. We need to surface it, talk about it, and get to a point where we can have healthy debate and healthy collaboration, so we can say, "Yes, we're a high-performing team."
Hey Betsy, let me go back to something you said about the buyer's perspective. At some point they're going to want to talk to the leaders of the company, and when they do, it seems like they have two objectives. One is to figure out whether the person is good at their job. And number two, if they like them, they also need to sell them on sticking around.
Right, exactly. The buyers are going to be very curious about who these people are that you've assembled on your team and what made them come here. Are they here just because they've been here 20 or 30 years and worked their way up? Are they actually critical to the business, or could I replace them? Do they have the skill sets? Are they potentially going to be a difficult person on the team?
So when you start to meet with buyers as a leadership team member, how you show up matters. It's okay to be curious and ask a lot of good questions, but they're going to be making decisions about you in that moment: Do I want this person on my team long term? Are they excited? Or could I find somebody else to replace them? There's a bit of openness and optimism you should bring as a leadership team member when you meet with a potential buyer. Ask questions, be curious: What are your plans? What's your intention? Are you going to grow the company? Are you going to fold it into your company? Are we merging? As a buyer, I would think they'd like that curiosity, because it shows you're committed to the company, you want to be part of it, you want to see it grow, and you want to be successful with them. So how you show up as a leadership team member in that conversation is really critical.
Hey Betsy, what's your perspective on this? What happens when a capable leadership team that's accustomed to operating under one owner—maybe not just for years, perhaps decades—suddenly finds itself working for someone with an entirely different set of expectations?
That's going to happen. If you've been working with a leader for many years or decades and that person leaves, you're basically having to rebuild a new relationship. Learning what motivates that new person is a key part of the acquisition. Again, being very open, asking questions, having good open lines of communication, and building that trust, relationship, and transparency are going to be critical.
You may not like this new person or their ways of working, because you know how to go—you've been very successful in this company and made it to this point—and now you have to report to somebody new that maybe you don't like. So it's critical how you approach it mentally: What do I like about this new person? What don't I? Can I live with it within my role on the team, or is there something else I want to do? Do I want to go somewhere else in the company, or somewhere else altogether? Hopefully not. And as a seller, hopefully you're also looking at that buyer and asking, "Is this buyer going to do right on behalf of my team? Is it going to be a good mix?" Not all sellers are that generous, but you would hope they're really vetting the buyer to make sure they're not going to come in and disrupt the team, and that they'll be a good partner and advocate for the company.
You hear horror stories about private equity coming in and gutting a company, and we've had personal experience. A really good friend of ours sold his company to a PE firm, and it was just like the horror stories. They promised it was going to be a cultural match and everything, and then they came in, started cutting people, and really ruined the company. Then I've had other clients where private equity came in, told them what they were going to do, did it, and it worked out great. Do you think it's easier for the seller when they're dealing with an individual buyer? It seems they're at a big disadvantage with a PE firm, because that's what those people do.
I've seen both sides of it as well. I was working with a firm that had just been acquired by a PE firm, and we were doing some SWOT analysis work. The seller was still there, still part of the company—I think they only bought a portion of it. I asked him, "When you were looking at doing this, what was important? Why did you go with this firm?" He said, "I had to make sure they were going to take care of us, that they were working on our behalf, and that they were going to keep my teams around." That was part of what he negotiated.
If you want to make sure your folks are going to be taken care of, you really need to understand who your buyers are. What are their intentions? What's their past track record? If it's a PE firm known for slashing and blowing up companies, that's your decision, obviously, but understand the repercussions it's going to have on your team and the people who work for you. Single buyers are fun too, because you can get to know them and really understand their intentions. But regardless of whether it's PE or a solo buyer or a small group, really understand their track record and history. What have they done in the past? What are their intentions? And what do you want your company to look like? Some sellers just want the money, and that's okay. Some really want to make sure everybody's taken care of, that there's a legacy, and that we're doing right by our employees.
Hey Betsy, before Walter closes us out—this has been fantastic. It's going to be extremely helpful to anyone who listens, both owners and members of the leadership team who aren't owners. If you could give one piece of advice to an owner preparing to sell, and one piece of advice to a leadership team that will remain after the sale, what would it be?
For the owner, really vet the people who are looking to buy your company, and know what your end goal is for your team and your employees. Don't just look at the number. Ask, "Is this really somebody who wants to take care of my team and my employees?"—if that's your true intention. Do the due diligence on that side of it. There's always due diligence on the numbers, but really: Who are these people? What are they going to do? What are their plans? Are they going to take care of my folks? What's important to me as the seller and owner of the company?
For a leadership team: be open-minded, be optimistic, and ask questions. This is business. Businesses get bought and sold all the time, and very rarely does a company never get sold or acquired. So be open-minded, be a good team member, share, and don't be difficult in how you show up. Know that the buyer already has an intention for what they want to do with the team. You can either decide to be a part of it, or you can be very difficult—but then you may find yourself not being a part of the team. So how you show up is really critical.
Thanks, Betsy. We really appreciate you coming on today. Like Pat said, it's been great. Before we close, is there anything you'd like to promote, and how can our listeners contact you?
There are a few things. The book is called The Fix. You can buy it on Amazon, Barnes & Noble, all those good places. It's a business fable about when your people aren't broken but your system is, and it talks about how to build a good operating system within your team and bring your team together. The other thing is on my website, crossimpact.co. There's a free leadership alignment survey that takes maybe five minutes. Fill it out and get feedback on how you're operating as a leadership team and which areas you should focus on. That will help you understand how to make your team stronger before you go into an exit. And you can always connect with me on LinkedIn, Betsy Kauffman. Send me a quick note, say you heard me here, and I'd love to talk with you.
Fantastic. Thank you very much. Really appreciate you joining us.
Thank you.
And listeners, if you'd like help building a more valuable, transferable business or preparing for your eventual exit, email us at email@ennislp.com. And if you'd rather begin your planning on your own, at your own pace, visit exitreadiness.com and explore ExitReadiness® DIY™, a really exciting new addition to the website. If today's conversation was helpful, please take 10 seconds to follow the show and leave a rating on Apple Podcasts or Spotify. It's the single best way to help business owners find us. And if you're watching on YouTube, subscribe there, too. Until next time, this has been the ExitReadiness® PODCAST—conversations that move you closer to a regret-proof exit. This is Walter Deyhle. I'm Pat Ennis, signing off.
