Skylar and Sheena were sisters and they both owned similar businesses which seemed to be valued at nearly identical levels. Each of the sister’s had desired to sell their business for an amount of money which would easily finance a comfortable retirement for themselves and their families. The had about the same business model, prospects for growth, intellectual equity, resources, head count and cash reserves. Yet the leadership style of the sisters were quite different.
Skylar was in the office every day. She had control over every variable of the business. Nothing happened without her knowledge and approval.
Like Sheena, she had two Sales Reps, but Skylar was always the person to negotiate the deals with critical clients. She oversaw contact with investors and business partners. She would direct the marketing initiatives. She ensured that customer service was timely and accurate. She kept a watch over production daily. She was involved in leading and managing every aspect of the business right on down to who would assume new responsibilities and how they would do so.
While Skylar appointed three managers for sales, administration and production, all decisions would filter through her before implementation. Whenever there was a question or someone wanted to move forward on something they all knew to discuss it with Skylar FIRST before ANY action was taken. Skylar even led all the meetings with employees. She felt this level of “oversight” was necessary for clear communication, good resource management and smooth operations. Skylar believed it was the key to her success and would someday pay-off big when it was time to sell the company. She had a well-oiled machine!
Sheena on the other hand was quite different. She only spent 3 or 4 days in the office and often worked from home. Whenever someone asked her a question she would typically defer it to someone else to answer. Occasionally she would visit clients with one of her two Sales Reps yet she spoke very little at these meetings. She would attend employee meetings but rarely led them. Sheena also established leaders for sales, administration and production who did most of the decision making and merely kept Sheena informed. Many times employees would just start a new initiative on their own and work with other employees to implement these changes, Sheena coached her managers to allow employees to enjoy this freedom. Even though several times these initiatives failed and consumed some resources. Sheena felt this was still OK. She spent more of her time just encouraging, listening and congratulating her team. She was very cordial but to many observers, it looked like Sheena was somewhat disconnected from her business operations. It seemed that “the tail was wagging the dog” at her company.
One day a private equity firm came along to evaluate both Sheena’s business as well Skylar’s. This was the moment each of the sister’s had been waiting for… PAYDAY!
The private equity offered to buy Sheena’s business outright for 12 million dollars (FOUR times her current level of sales).
They decided to PASS on making an offer to Skylar for her business as they did not feel it was worth much to them.
Skylar was furious. How could this arrogant private equity firm value her sister’s business at four times the current sales yet feel that Skylar’s business was worth nothing?
What do you think the private equity firm told Skylar?
I am dying to hear your answers. Remember other than their style of leadership EVERYTHING about these businesses were the same.
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