21 Apr The Hard Truth About Transitions: Manage Expectations Before They Manage You
By: Mike Schmitt, The Rubra Group, LLC
One of the most under-discussed—but consistently mission-critical—elements in any business transition is the art and discipline of managing expectations. Not just those of the founder or seller, but also of next-generation leaders, external advisors, and employees.
We often imagine succession as a straight road: get a valuation, name a successor, sign some paperwork, and ride off into the sunset. But that image, while comforting, rarely reflects the complexity of a leadership transition in any privately held firm—be it a family business, professional practice, or founder-led company. It ignores the emotional dynamics, the leadership gap, and most critically, the expectation gap.
At the Rubra Group, we’ve seen it repeatedly: otherwise, solid transitions derail not because of poor intent or lack of love, but because expectations were left unspoken, unchecked, or untethered from reality.
The Mirage of a “Simple” Transition
It’s natural for a founder to hope for a clean and simple succession. After all, they’ve built something strong, surrounded themselves with capable people, and may even have a successor already involved in the business. Why shouldn’t it be simple?
Here’s the answer: because this isn’t just a business transaction. It’s an identity shift. A change in purpose. A rebalancing of influence, wealth, and history.
Even when all parties agree on what should happen, they’re rarely aligned on how and when.
That’s why expectation recalibration isn’t a last-minute fix. It’s a discipline to be integrated throughout the transition process—starting years in advance.
Valuation: The Number That Can Make or Break the Conversation
One of the most obvious areas where expectations get crossed is valuation. Some founders see the business through the lens of decades of sacrifice—nights without sleep, holidays missed, personal guarantees made. Their number reflects the blood, sweat, and tears—not just EBITDA.
And yet, the market doesn’t reward sentiment. It rewards cash flow, transferable systems, and risk-adjusted opportunity.
This is where many well-meaning transitions get stuck. The founder wants to monetize their legacy. The buyer—whether internal or external—wants to justify the price. And suddenly, an emotional enterprise is reduced to a spreadsheet. That’s when feelings rise, and trust begins to wobble.
Here’s our guidance: don’t rely on a single valuation. Solicit two or three independent assessments—ideally from professionals who understand privately held, founder-led organizations. Educate all parties about the range of methodologies (income-based, market-based, asset-based) and the assumptions behind each.
It’s not about arriving at one perfect number. It’s about creating a shared understanding of what drives value—and where opportunity lives.
The Next Generation’s Blind Spot
Interestingly, it’s not always the older generation who overestimates the business’s worth. Quite often, we see the next generation underestimating it.
They may see the operation every day, with its imperfections, debt, and stress. They may think, “This isn’t as big a deal as Mom or Dad makes it out to be.” They see the day-to-day grind—not the strategic value of the enterprise as a platform for legacy wealth, professional impact, or community leadership.
This undervaluation can manifest in several ways:
- Reluctance to step into leadership roles (“It’s not worth the hassle”)
- Disregard for succession planning (“It’s just a firm”)
- Unwillingness to invest personal capital in modernization or growth
This is why expectation management isn’t just about correcting over-optimism. Sometimes, it’s about helping the next generation see the full scope of what’s been built—and what it can become.
Tactics for Recalibrating Expectations Across Generations
To get everyone on the same page, here are a few strategies we’ve found effective:
1. Host a “Valuation Education Day.”
Bring in an outside expert to walk through what goes into valuing a business like yours. Let all parties hear the same logic, same metrics, same reasoning. The goal isn’t the final number—it’s creating shared literacy.
2. Share Stories of Similar Transitions.
Nothing brings clarity like comparison. When leaders hear how others handled buyouts, earn-outs, or leadership shifts, they begin to reframe their own assumptions. Peer context is powerful.
3. Map Out “Value Beyond the Numbers.”
Create a visual representation of your intangible assets: client loyalty, brand reputation, community trust, leadership bench strength, intellectual property, or market position. These don’t always show up in a financial model, but they drive real-world value.
4. Embrace Third-Party Facilitation.
Sometimes expectations are too emotionally charged to be handled internally. A neutral facilitator can ask the hard questions and defuse tension before it becomes dysfunction.
5. Build Financial Fluency for Future Leaders.
If the next generation doesn’t understand enterprise value, they won’t appreciate enterprise responsibility. Whether through formal education, mentoring, or advisory board participation, give them a structured on-ramp to stewardship.
Expectation Management Is Leadership
Ultimately, managing expectations isn’t a sideshow to succession—it is succession. The best leaders are those who can see the situation from multiple perspectives, adapt the plan when needed, and align people to shared realities.
If you’re a founder, that may mean facing the possibility that your business won’t fetch what you hoped—and finding peace in a legacy that’s still impactful. If you’re the next generation, it may mean realizing you’re stepping into something far more powerful and nuanced than you first thought.
The path to a successful transition is not built on perfect timing or perfect people. It’s built on honest conversations, early education, and steady recalibration.
Let’s start those conversations before the gap becomes too wide to bridge.
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