Personally and professionally, we all have that unwritten “to-do” list that is perennially past-due. On the personal front, this can encompass updating your will or perhaps getting that dreaded colonoscopy or mammogram; all things we know we need to take care of, but items we might procrastinate because they aren’t exactly fun or rewarding to complete.
Our professional lives often have a similar list. In privately held businesses, we see these issues manifest in a few common areas:
- Employee issues. In many businesses, there are conversations between employees and their managers regarding compensation, titles, promotions, etc. that are left unresolved. Both parties kicking the can for another day.
- Customer agreements. Business owners often are hesitant to refresh expired contracts for fear of upsetting their best customers even though there are elements of the current contract that aren’t serving the business well.
- Regulatory gaps. Perhaps a permit has lapsed or is no longer adequate for the size and scale of the business. Yet, there is a hesitancy to raise this deficiency with the government in fear of a financial consequence.
- Family matters. In family businesses, personal and business matters often bleed together. The list is long, but unfinished family matters may include your children having different expectations for their role in the business upon your succession, or having family members on the payroll not capable of doing the job they have for the compensation they earn.
It is human nature to want to delay taking action on these uncomfortable topics within your business. However, the future value of your company will be best served by resolving these issues well before you plan to transition.
When you seek the next owner for your business, the buyer will want to understand everything about your business — the good, the bad and the ugly. The buyer will enlist a team of diligence partners to canvas all aspects of your operations including customers, employees, regulatory compliance, financial and legal. The diligence team is helping the buyer to capture the knowledge base that resides within you — accumulated over years and sometimes decades of business ownership.
Buyers will often take a conservative approach (worst case scenario) in concluding how resolving these outstanding issues will impact your business. Also, these nagging issues become a distraction. Instead of talking with the buyer about what the future holds, you are stuck talking about the past. In some instances, these skeletons in your closet can result in a purchase price adjustment, negatively impacting the value you receive.
As we approach the new year, it is a good opportunity to finally begin addressing this unwritten list in your business. Your New Year’s resolutions for 2026 should include progress toward this goal. You will be rewarded in the future by tackling these tough issues today. Now is the time. ●
Corrie Menary is a Partner at Kirtland Capital Partners
