Business transfers: Don't underestimate the importance of human capital! 

Are you getting ready to take over a business?  Keep in mind that the transfer process is likely to have a direct impact on the people who already work there. In fact, assessing the company's human capital is an important aspect of any acquisition.

For key employees of the orgazination, like senior executives, business ownership transfers often require adapting to new management or being assigned new tasks and responsibilities, which can directly affect all other operations. If these people are on board with your vision, the business is much more likely to succeed.  Richard Quinn, senior manager of business transfers at Desjardins, spoke to us about some of the key points to consider in the context of a business acquisition.

First of all, you need to make sure the business has all the essentials covered. Sales, marketing, purchasing, production, logistics, finances, human resources, research and development are must-haves for any business. You need to make sure the people in charge of these departments have the expertise required to keep the business moving. To assess this, you can look at their academic background and technical knowledge, but you should also consider how long they've been working for the company. The relationships they've built with clients and suppliers are important too. Great managers can also have an impact on performance and the value of the business. Their training, commitments and ambitions should all be considered.

If you can access the team's files and base your assessments on documented data, you'll be able to make better decisions. Preparing a list of questions for the seller and key employees will also help (see examples below). 

Employee loyalty and commitment are also important factors to consider.  When you assess the work environment, what do you notice?  Is there a sense of solidarity among teams? Do they believe in the organization's mission and values? Do they have a strong sense of belonging? 

In other words, when the business was transferred, did the employees seem like they wanted to stay? These questions can help you identify employee retention risks before they arise.

When an SME gets transferred, emotions can run high. It’s almost always a highly stressful period for everyone ... especially the new business owner and existing employees. For employees, a business transfer often symbolizes uncertainty and the need to adapt to new management—and many people are resistant to change. What’s more, there’s a good chance that individuals who were passed over for the leadership position will have a sour attitude if they decide to stay. Studying the company’s organization chart before you proceed with the acquisition can be an effective way of anticipating these risks.

Before any transaction, ''It's a good idea to pay attention to how business processes are managed, how well the business is performing and what the work environment is like.'' But perception, judgment and unconscious bias often come into play during human capital assessments. To reduce your risk of making a mistake, consider reaching out to human resource advisors, business managers and organizational development professionals for support. They'll base their evaluations on rational, objective criteria to help you make the best possible decision.