– and Why the Owner-Manager Faces a Unique Challenge
A business sale is one of the most strategic decisions an owner can make.
It is a process that involves not only numbers and valuation, but equally people, emotions, control, and future opportunities.
Successful sale preparation requires clearly defined roles – and that those roles are actually carried out.
In small and medium-sized enterprises, however, roles often overlap, especially when the owner, CEO, and board are in reality the same person. This creates both strengths and significant challenges.
This article provides an overview of the roles – and concludes with a clear recommendation on when an external advisor or an external board creates the most value.
The Owner’s Role: Strategist, Principal, and Decision-Maker
The owner’s responsibility in a future sale begins long before the process starts. The owner’s key tasks are:
Defining the Purpose of a Sale
A sale can take place for many reasons – retirement, succession, capital for growth, risk diversification, or personal freedom.
The objective determines everything else:
- Should the company be sold fully or partially?
- Is the desired buyer strategic, financial, or internal (family)?
- What role does the owner want after the sale – continue, step back, or something in between
Without this foundation, sale preparation often becomes uncoordinated and inefficient.
Ensuring Governance and Documentation
Buyers look for structure, order, and transparency.
The owner must ensure:
- a documented strategy
- clearly defined roles
- proper accounting practices
- management models and processes
- compliance with legislation
The less “owner-dependent” the company is – the more attractive it becomes.
Allowing Space for Management and the Board
An owner who inappropriately mixes operations and ownership creates uncertainty. The owner must step into the role of strategic oversight and allow management and the board to perform their duties.
The Board’s Role: Structure, Risk Management, and Objectivity
An active, professional board can be decisive in achieving a successful sale. Its responsibilities include:
Assessing the Company’s Strategic Maturity
The board must ensure that the company:
- has a realistic strategy
- can present documented results
- understands its risks and works systematically with them
Buyers pay for potential – but only when it is substantiated.
Correcting the Owner’s Blind Spots
Owners often have strong emotional ties to their company. The board must ask the questions the owner does not:
- Is the company too dependent on you?
- Is the product portfolio too narrow?
- Has the market changed?
- Is the organization ready for due diligence?
Objectivity is one of the board’s most important functions.
Board Members role in Small and Medium-sized companies.
In small and medium sized companies, an active and professional board are involved in strategy and tactics, and understands to fill our the “blind spots” and “competence gaps” of the owner / CEO.
Ensuring Management Competence and Capacity
A buyer will often assess:
- whether management can continue
- whether the organization can stand on its own
- whether there is growth potential without the owner
The board must ensure that the CEO – whether owner or not – has the right competencies and support.
Management’s Role: Operations, Execution, and Documentation
Management handles the operational aspects of preparation. This includes:
Delivering Stable Operational Results
Nothing increases value like predictability. Management must:
- ensure stable EBITDA performance
- reduce dependencies
- document KPIs
- demonstrate growth journeys that can continue
Implementing Governance and Processes
Management must be able to document:
- processes
- contracts
- HR structures
- customer agreements
- compliance
Supporting Due Diligence
During a sale, management is often responsible for answering 80% of the buyer’s questions. Their ability to present the company professionally directly affects the price.
The Challenge of the Owner-Manager Model
When the CEO and owner are the same person, specific issues arise:
Role Conflict
The owner-manager must both:
- ensure operational performance (CEO role)
- maximize the owner’s financial return (owner role)
These objectives often collide.
Emotional Bias
An owner-manager views the company through passion and history. A buyer sees numbers and risk. This often leads to unrealistic expectations regarding price and terms.
Personal Dependency
Many owner-managed companies have:
- customers who relate to the owner, not the company
- employees who seek decisions from the owner
- knowledge residing in the owner’s head
This significantly reduces the sale price.
Lack of Counterbalance
Without a professional board or external advisor, the owner-manager can become stuck in habits and assumptions that hinder sale preparation.
External Advisor or External Board?
Both models create value – but in different ways.
Advantages of an External Advisor
- Fast access to specialist expertise
- Experience with sales processes, due diligence, and buyer requirements
- Can run processes without changing governance
- Ideal for shorter engagements or specific projects
Disadvantages:
- Not part of the company’s long-term decision-making structure
- Cannot make decisions, only advise
Advantages of an External Board
- Long-term sparring and accountability
- Can ensure governance, strategy, and leadership development
- Provides objective counterbalance to the owner
- Creates value before and after the sale
Disadvantages:
- Requires time, courage, and commitment
- Changes the power balance within the company
- Not necessarily specialists in the actual sales process
Recommendation
The strongest solution is a combination:
- An external board for long-term governance, development, and maturation.
- An external advisor for the sales process itself.
For owner-managed businesses, this is often the only model in which emotions, facts, and strategy are handled professionally – and where the sale price ultimately ends up where it should be.
