Opinions of contributing entrepreneurs are their own.
These are difficult times. We see a financial environment where the global initial public offerings (IPOs) markets seem to be lifelong. This is despite some hopes of a rebound in the US and cautious optimism about the pipeline in the Middle East, and downturns for private companies are becoming more commonplace. The recent technology layoffs and shaky liquidity at several high-profile banks have also led to uncertainty about the future in many sectors.
While cashing out may not be as easy as it was in the boom years, it’s still as important as ever to leave a company you run in the best shape possible. More than anything, your departure could potentially define who you are professionally for years to come.
A rocky exit could potentially tarnish your name with partners, investors, colleagues and teams you manage, causing exponential damage to a significant portion of your career. Your professional reputation is an important determinant of your future employability as a sought-after executive or consultant. It also often determines your ability to raise money for future ventures.
The hard truth is that you don’t have to be Elizabeth Holmes, the former CEO of health tech company Theranos, a media darling who eventually became the media’s favorite villain, to be haunted by past controversies. (Fortunately, Holmes’s case is unusual. Her controversy turned into charges of conspiracy to commit fraud aimed at misleading investors and regulators, which then culminated in criminal charges). Of course, it doesn’t have to go that wrong to still affect your future in a big way.
To avoid damaging your reputation – your greatest asset – careful stakeholder management is critical when an exit is imminent. It may be time to take a closer look at your exit strategy after a major financial milestone, such as a successful M&A deal. It is also possible that you are considering leaving because greener pastures await. Whatever the trigger, you want to make sure you leave things on a high note without burning any bridges.
Related: 4 tips for a happy exit from the company you founded and love
The first thing to do is define the goals you want to achieve with your carefully crafted exit plan. This could include facilitating a smooth transition, preserving the stability and reputation of the company and preparing the road to continued success under new leadership.
Being completely transparent – at least internally – about the reasons for your departure, your plans, your contribution to the company and the transition process is crucial to avoiding rumors or in some cases even conspiracy theories.
Think carefully about your communications with staff, investors, consumers and other stakeholders. The tone of this communication will depend on your specific circumstances, the culture of your company and the stakeholder group that you target. However, usually a friendly and open approach works better than dry corporate language or – more recently – content drafted by ChatGPT.
Choosing and caring for your successor may or may not be your responsibility. It’s also possible that you and the new CEO disagree. Whatever your relationship is behind closed doors, publicly showing a united front is important to the business and your reputation management.
Related: Why investing in reputation management is critical to your business strategy
Ensuring minimal to no damage to the business you run is a core component of a successful exit. In addition to showing no signs of disagreement among top executives, you should also exercise some due diligence, carefully documenting all key decision-making processes and creating a framework for your successor to help him or her hit the ground running. .
It’s also important to always keep in mind how you refer to your former colleagues and the company – in both public and private conversations. Avoid criticism, even years after you’ve left, as the negative story could be damaging to your legacy and could even be seen as a sign of weakness.
Related: When Should Business Owners Start Developing an Exit Plan? Here’s what you need to know.
While this may seem intuitive, not fighting the process is also important and should make it easier for everyone involved. Work with the board, receive referrals and listen to recommendations to fully preserve your legacy and that of the business you helped build or grow.
Keep in mind that there is always a chance – no matter how small Ø – for a much-needed triumphant comeback. For example, if the new CEO fails to meet the expectations of the board, investors or consumers, you are the best person to step in to save the day. After all, Disney CEO Bob Iger was reappointed to the top job more than two years after leaving the company, even though he said he wouldn’t be returning to the position.
The most important thing, however, is that you enjoy that well-deserved gardening leave once the dust has settled. It’s a much needed calm before the storm and a time to sit back, reset and enjoy some quiet time once your exit is complete before embarking on the next chapter of your professional career.