Should I hire a General Manager right after acquisition to start replacing owner/op?

February 26, 2020

by a searcher from University of Georgia in Los Angeles, CA, USA

[Edited for clarity]

Either hire an industry experienced GM or promote a GM to start replacing the owner.

The goal is to have a new GM in place as soon as possible to start take over day to day operations from the current owner. So why wouldn't I hire a GM to start immediately?

Additional details

Company isn't complicated. Mostly service related with a diverse client base.

The owner will stay on for 2-3 months for training.

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Reply by a lender
from Carnegie Mellon University in Pittsburgh, PA, USA

good comments from both Rob and Greg. I will add that you should really evaluate the current bench of management. do they need someone on top of the pyramid? or can you sort of assume the "absentee owner/sponsor role? maybe you wont need to be in the business 50 hours a week, but you can still run some weekly meetings and keep people honest. this is always a deal by deal discussion for us, but they plan does need to be laid out ahead of time. more skin in the game post close for sellers, the better. are you going to give management any equity? or the new GM? that extra incentive can align interests and is pretty standard. if seller really is going away pretty quickly, the knowledge transfer is key and id agree getting someone sooner than later should be a priority. i would still make sure you have that relationship with sellers where you can pick up the phone in times of need or just for a monthly friendly lunch (your treat!).

Reply by a searcher
from Harvard University in Omaha, NE, USA

You’re new to the business and haven’t learned it yet, and you want to bring in a GM—who will also be new to the business—to take over day to day?

Do you know who and what to recruit for to be a good fit in this position (when you’re new to the business)? How long is that going to take? How do you plan to explain your company and your vision?

How'd your employees take having a new owner? How will they feel when you bring in a GM to run the day to day when both of you are new to the business?

I don’t know your thesis behind buying your company, but I’d recommend that you should spend time learning the company and running it before you make a material decision like bringing in a GM.

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