A buyout does not succeed just because the paperwork is signed. Internal successions fail most often not for financial reasons, but because managers or employees are unprepared for ownership.
Running a business as an owner requires different skills, behaviours, and responsibilities than managing one as an employee. The transition from manager to owner is a mindset shift as much as a technical step. Preparing the team before and after the deal is one of the most important investments a founder can make.
Assessing Readiness
Before offering ownership, assess whether the team is ready to take it on. Questions to consider include:
- Does the team have experience across finance, operations, sales, and governance?
- Are they aligned on strategy and values, or divided by competing priorities?
- Have they demonstrated collaboration and trust under pressure?
- Do they understand cash flow, capital allocation, and financial accountability?
- Have they expressed a genuine appetite for ownership responsibility?
Where gaps exist, they must be addressed well before completion of the deal.
Coaching the Transition
Being a good manager does not automatically make someone a good owner. Owners must:
- Make final decisions and accept the risk attached
- Set strategy, not just implement it
- Manage capital allocation and debt, not just budgets
- Lead culture and values, not just teams
Coaching provides structured support for this transition. It gives managers a safe space to develop confidence, test decisions, and build new skills.
Areas of Focus for Coaching
- Financial acumen: Understanding cash flow, debt obligations, and capital allocation.
- Strategic thinking: Moving from operational firefighting to long-term planning.
- Leadership presence: Shifting from peer or line manager to cultural steward.
- Governance discipline: Engaging with boards, advisors, and shareholders.
- Communication: Building confidence with staff, clients, and stakeholders.
Building Governance Structures
Good governance creates clarity and accountability, protecting both founders and successors. Structures to consider include:
- Shareholders’ agreements that define roles and decision rights.
- Advisory or formal boards that provide oversight and independent perspective.
- Meeting rhythms — weekly management, monthly reporting, quarterly strategy.
- Employee forums (in ELBO/EOT models) to give staff a voice.
Governance helps successor teams grow into their roles, while giving founders confidence the business will continue in good hands.
Communicating Expectations
Ownership comes with responsibility. Founders should communicate clearly with the successor team about what ownership means:
- Accountability for financial performance
- Stewardship of culture and people
- Commitment to governance and reporting
- Collaboration and conflict resolution
- Long-term decision-making, not short-term gain
The earlier these expectations are shared, the fewer surprises after the deal.
Case Snapshot: Coaching a Successor Team
A Queensland-based professional services firm completed a management buyout in 2023. The three new owner-managers were highly capable in operations but inexperienced with governance and finance.
An external coach worked with them for 12 months, focusing on cash flow management, board engagement, and cultural leadership. Within a year, the team was confident in presenting to the board, running strategy sessions, and making capital allocation decisions. Staff engagement rose, and the founder was able to step back fully into an advisory role.
Lesson: Coaching accelerates the transition from manager to owner, reducing risk for both founder and employees.
Common Pitfalls
- Founder assumptions: Assuming managers are “ready” without testing or supporting them.
- Capability gaps: Leaders who are strong operationally but weak in finance or strategy.
- Unclear roles: No clarity on who decides what once ownership shifts.
- Lack of accountability: Without governance, decisions drift or conflict escalates.
Key Takeaways
- Preparing the team is critical to succession success.
- Assess readiness early and address capability gaps before the deal.
- Coaching supports managers as they transition from employee to owner.
- Governance frameworks give structure, clarity, and accountability.
- Clear communication about expectations reduces surprises and builds confidence.
- Investment in people and culture is just as important as deal structure.
Next Chapter: The 100-Day Plan — Making Ownership Work in Practice
We will explore what happens immediately after completion, why the first 100 days are critical, and how to set the new owners up for stability and success