Smooth Business Handovers - A Survival Guide For SA Entrepreneurs

Amogelang Montane, human resources business partner at Business Partners Limited

Amogelang Montane, human resources business partner at Business Partners Limited, believes that effective leadership is at the heart of any successful business transition. “Any big change, when not managed properly, can result in operational inefficiencies, employee uncertainty, and even a knock to revenue. However, many of these results are often avoidable, and with a well-planned handover strategy, it’s possible for your business to make it through these times of uncertainty.”

While any change in leadership can be challenging to manage, Montane notes that mergers and acquisitions require particularly careful consideration – especially when a smaller business is being acquired by a larger company or corporation. “When a business merges with another or is acquired by a larger group, the shift in company culture, operational processes, and management structures can cause significant disruption to the ‘norm’ employees have become used to. Small and medium enterprises (SMEs), in particular, may struggle to integrate into a larger corporate framework without a clear roadmap.”

Montane lists four key considerations for entrepreneurs to ensure business continuity during these types of transitionary periods.

1. Clear communication

   Transparent communication with employees, customers, and other key stakeholders is vital. “Ensuring that all parties are kept up to date about changes and their implications will help manage expectations and reduce uncertainty across the organisation,” says Montane.

2. Strategic planning

   A comprehensive transition strategy should be in place before any major leadership or structural change. This includes clear succession planning, especially for family-owned businesses and founder-led SMEs, notes Montane. “These smaller, tight-knit businesses often face challenges when ownership or leadership is transferred. Without a structured succession plan, conflicts may arise, threatening the business’s continuity,” he explains.

3. Talent retention

   It’s estimated that 47% of key employees leave within the first year following a merger or acquisition, and 75% leave within the first three years. “This is why keeping employees motivated and aligned with the company’s vision during a transition is one of the greatest human resources responsibilities in a merger. The loss of talent after an acquisition can be so significant that it erodes value from the transaction,” says Montane.

   He adds that conducting due diligence around culture and operational processes is also critical when merging two organisations. “While HR is responsible for supporting employees on a day-to-day basis, it is up to the leadership team to provide reassurance, guidance, and opportunities for professional growth to retain key talent.”

4. Financial stability

   Ensuring access to capital during periods of transition can help businesses to persevere through potential financial instability. “As a financier to SMEs, we have seen first-hand how well-planned transitions supported by the right funding can ensure business continuity,” adds Montane.

   While leadership transitions can be daunting, they also present an opportunity for businesses to evolve and strengthen their competitive position. By implementing a structured approach, SMEs can mitigate risks and emerge stronger on the other side of change.

“As South Africa’s SME sector continues to grow and evolve, businesses must embrace change as a constant. With the right leadership and strategic planning in place, transitions can be transformed into catalysts for success,” concludes Montane.