Getting Exit Ready by Getting Out: Management Succession

Industry: Commercial Services.

Turnover: $50M+

Ownership: Founder-led, privately held.
 
Project Trigger: Preparing for investor readiness and eventual founder exit.

Background 

Our client, a well-established commercial services firm, had experienced consistent growth under the leadership of its founder. With an eye on future investment and a potential exit, the founder recognised the need to transition to a more corporate management structure. 

Approach 

Active Directions played an advisory role, whilst also getting our sleeves rolled up to drive key components through the transition.  The critical components of the management succession – in this specific business - included: 

1. Capability Review & Management Restructure 
   We began with a comprehensive capability review of the existing leadership team. This led to a strategic management restructure, ensuring the right people were in the right roles to support future growth. 
   
   
2. Establishing Governance & Performance Cadence 
   With the new team in place, we introduced a rhythm of structured management reporting, regular leadership meetings, and transparent communication practices. This helped build trust and fostered a high-performance culture. 
   
   
3. Performance Framework & Incentives 
   A performance review framework was developed and rolled out across the organisation. We also implemented short-term and long-term incentive program to align leadership efforts with business goals. 
   
   
4. Continued focus on growth 
   A key criteria for the transition to a new CEO was to ensure the business kept achieving its targets.  Therefore, annual and quarterly strategic reviews remained a focus to ensure highly-sustained growth was being achieved. 
     
5. CEO Succession Planning 
   With growth stabilised, we initiated a CEO succession process 24 months ahead of the planned transition. This included: 

• Developing detailed job descriptions for the incoming CEO and the founder’s new role as Chair. 

• Mapping out a phased handover of responsibilities. 

• Preparing and running scenarios to prepare for various outcomes (e.g. crisis management). 

• Executing on an internal and external communications plan around the transition to ensure all stakeholders were informed at the right time. 

Key Takeaways 

• Preparation and time are critical - starting early enabled a smooth and credible transition. 

• Independent facilitation ensured objectivity and alignment across stakeholders. 

• Clear communication and transparency built trust and minimised disruption. 

Starter Questions for Partners and Advisers 

1. What are the personal goals of the Founder an new management 
2. How prepared is the leadership team to support a transition away from a Founder? 
3. What controls, communications and reporting would create the right balance between trust and empowerment?