Story:
Leadership Amidst Obvious Uncertainty

By Gavin Daniels

August 25, 2010 at 3:55pm

Summary

The setting is this: the business press breaks a story about your SBU's divestiture before you have heard anything internally.

What happens next: executives deny the rumors until the next earnings call, when they admit that "strategic options" are being explored.

Context

The atmosphere in my business unit has changed dramatically over the past few months since the announcement. Uncertainty has bred anger, frustration, fear and a host of other emotional responses normally rare in our conservative culture. My team are all ready to post to new internal positions, however we are all frozen in our roles to ensure continuity should we be sold (we are part of the asset base).

Triggers

The company is shifting the strategic focus to product segments that have growth opportunity. Our business unit commands a large share of the market, but the market has been anemic for the past decade. The SBU has high margins, which make it attractive to private equity firms or strategic buyers looking to bolt on more brands in the same segment.

Challenges & Solutions

I was brought into the dilligence team four months ago. I have longed to work on an M&A deal, however it is a potentially bittersweet experience because my team could end up being shipped to another city or unemployed. For me, the opportunity to take a public business private is exciting in many ways. For my young team, however, this is a scary prospect. They joined the company for its reputation in finance career development, and could end up in a smaller, more entrepreneurial company or even laid off.

Lessons

Until the past two weeks, I followed the strict rules of our dilligence team and told nothing of the impending deal to my team. Rumor circled, the project name could be heard throughout the hallways, yet I kept all details secret. After seeing the impact of the swirling secret on my team, I decided to take action. I drafted up some ideas for my manager and schedule half an hour meeting. Our worst case would be losing the team to other companies in the short-term and operating without them under private ownership. He agreed that I needed to present the potentially imense opportunities that lay ahead. I asked around other finance managers and several had been part of divestitures and carve outs. Each manager listed the invaluable lessons learned before, during, and after such transitions.

When i finally met with my team, I had already matched up their career objectives (on file) with the prospects that lay ahead. The opportunity to implement new systems, work in treasury, travel abroad and manage new hires were high priority for the team. They could gain functional experience in one year that would take several years in a larger organization. This turned their aprehension into excitement. I also reminded them that shoud the new organization not be ideal for their career development, a move back into public company corporate finance would probably be easier with this experience on their resume.

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