We are weighing an internal management buyout against an external sale to a private equity firm. How do we evaluate whether our current leadership team actually has the conative drive to run the business as owners?

Question

Tyler Smith · Accepted Answer

An internal successor sounds appealing because it preserves culture, but running a business requires a different conative drive than managing one. To evaluate your team, look past their cognitive skills and emotional loyalty. You must understand their hardwired problem-solving instincts. Use conative assessments to measure how they naturally take action under pressure. An internal buyout requires leaders who can manage high levels of risk and uncertainty. Look at their Quick Start and Follow Thru scores. Owners need a strong drive to initiate change, handle financial risk, and build new operational systems without a safety net. If your current leaders have low Quick Start scores, they are likely to freeze when they no longer have your vision to guide them. They may excel at executing an established plan but struggle to chart a new path. Use Keith Cunningham's Thinking Time to ask yourself what plans and commitments these managers have made on their own. Have they demonstrated an intrinsic drive to refine and simplify operations, or do they wait for your permission? If your team lacks the necessary conative drive to operate as owners, an internal transition will likely fail, and you must opt for an external sale to protect your legacy and capital.