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

Before you decide to take over a business, you need to consider that the transfer process is likely to have a direct impact on the people who work there. In fact, assessing the company's human capital is an important aspect of any acquisition.

For key employees like senior executives, a business transfer entails having to adapt 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. We spoke to Richard Quinn, Director, Business Transfer Support Team at Desjardins Group, about what buyers should consider when evaluating a company's human capital.

First of all, you need to make sure the business has all the basics covered. Sales, marketing, purchasing, production, logistics, finances, human resources, research and development are must-haves for any business. It's always a good idea to make sure that the employees who are in these roles are qualified. 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, ambitions and level of commitment are all aspects that need to 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). 

Another point to consider is employee loyalty and how involved they are in the business. Take a close look at the company culture. Do people work well together? Do they believe in the company's mission and values? Do they have a strong sense of belonging? In other words, how likely are they to keep working for the company after the transaction goes through?

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.