By Thomas J. McCoy

      Start with the end in mind. That is Steven Covey’s advice in The Seven Habits of Highly Effective People.

      As an entrepreneur and business owner, what is your end game? When the time comes to implement their exit strategy, many business owners will engage a mergers and acquisitions firm to help them receive maximum value for their business. However, to obtain maximum value, your exit strategy should always be an ongoing part of business operations.

      A knowledgeable mergers and acquisitions professional will tell you there are three key elements necessary for obtaining maximum value at time of transition:

1. A strong history of earnings growth
2. A focused and dedicated work force
3. A leadership team that can run the company after your departure

Eye on the Work force

      While all three are important, No. 2 is also the driver behind the other two. A focused and dedicated work force has two primary benefits: 1) It is essential to creating a strong history of earnings growth and 2) labor problems show a lack of leadership and reduce the value of the company in the eyes of the buyer.

      The way to develop a focused and dedicated work force is to transform the traditional employer/employee relationship into a dynamic business partnership. Do this by treating all employees as you would other business partners.

      Does it make a difference? You bet it does. Management at Springfield Remanufacturing Company, an engine remanufacturing company located in Springfield, Mo., began to treat their employees like business partners, and in less than eight years reduced their debt-to-equity from 89:1 to 1:1. In the process, they created an average revenue growth of 55 percent per year and an average job growth of 68 percent each year. All this from a bankrupt company that could no longer compete effectively in the automotive industry.

      And they’re not the only ones who are partnering with their employees. Companies large and small, in service sectors and in industry are showing tremendous growth in revenue, profit and market share by transforming their employee relationship from one of hired hand to one of business partner.

Four Parts

      How are they doing this? Many are using the partnership model developed and refined over 10 years of research and application. The research identified four key competencies that business partners possess. These were translated into management practices used to develop employees into business partners. They are:

1. Educate
2. Enable
3. Empower
4. Engage

Educate
      Business partners can effectively implement strategy and grow the business because they are educated about the business. They understand the business, who the competitors are, what the industry trends are and how the company’s strategy matches the marketplace. They understand how the company makes a profit and generates cash. They understand pricing, costs and margins. They understand how to interpret the financial documents that report the company’s progress (or lack of) toward business goals.

      The better partners understand the stories behind the numbers on each line of the financial statements. So the first step to developing employee partners is to educate all employees about how your company makes a profit and generates cash as well as how each individual can affect the profitability and growth.

Enable
      Business partners can effectively implement strategy and grow the business because the company has systems enabling them to actively participate. Information sharing, team building, continuous improvement, total quality, team suggestion programs or a position on the management council are all examples of processes that enable employees to become involved and participate.

Empower
      Business partners can effectively implement strategy and grow the business because they are empowered to take action that affects profit. Once employees are educated and enabled, empowerment becomes a social event. It is where the reins of control are formally turned over to those who need them so they can make the hundreds of daily decisions in the workplace that determine success.

      Along with empowerment comes the expectation of responsibility to behave in a mature, adult manner, to weigh the risk versus the reward, and to assume the initiative rather than waiting passively for direction.

Engage
      Business partners can effectively implement strategy and grow the business because they are engaged in the business. Employees find a partnership culture much more rewarding because work becomes more meaningful. They understand that this rich, intrinsic reward is only available as long as the company competes successfully. Therefore, the partnership culture becomes a positive reinforcement for each employee to assume responsibility for results.

      However, partners do not live by intrinsic rewards alone. They also share in the financial success of the business. Thousands of companies today have realized the value of including employees in some form of incentive compensation, thus effectively linking business strategy to each employee’s paycheck.

      If you want to develop an exit strategy with an emphasis on maximum value, start by developing a culture of partnership.

Thomas McCoy is managing director of VERCOR, a mergers and acquisitions firm with investment banking capabilities. You can reach him at (816) 333-1261 or .