Don't hang aroundEntrepreneurs who sell their businesses...


April 20, 1992

Don't hang around

Entrepreneurs who sell their businesses but try to stay on as top executives usually don't survive, according to a new study. And that may hamper the performance of the acquired firms, according to Kim A. Stewart, a University of Denver assistant management professor who is conducting the study.

In her two-part study, Ms. Stewart is looking at the experiences of 515 CEOs of firms ranging from large to small, public to private.

In the recently completed first phase, she found that 56 percent of the CEOs had left by the end of the first year after acquisition and 86 percent had departed by the second year.

In their written comments, the CEOs cited a loss of autonomy as the main reason for their departures.

The new boss' management objectives and values frequently conflict with those of the acquired firm, the study found.

Eventually, the "entrepreneurial spirit" that thrived in the firms before acquisition disappears, the study said.

Asking for a raise

It's been a long time since you've received a raise. You believe you've earned one, and you know you need one. But how can you tell if now is the right time to ask for one?

Donald Weiss, president of Self-Management Associates in Dallas, suggests you look at three factors before you approach the boss for more money:

* Labor market conditions. Check out the supply of experienced people in your field and the current demand for those people. Also look into the transferability of your skills to industries and the demand for your skills in those industries.

Obviously, if there are a lot of people with similar skills out there, and if what you do isn't of much use to anybody else, now may not be the time to talk about your unique value to the company.

Where do you get information on labor market conditions? Trade journals, business magazines and Labor Department statistics available at the public library are good places to start.

* Market factors. If you work for a company that makes a product, investigate how wholesale buyers of your product are using their inventories. Sales going up while inventories are going down is a good sign that money may be available for raises.

If you work in a service industry, look at your profit margin. Just because sales are up doesn't mean profits are.

* Your company's financial position. What is its percentage of debt relative to total assets? If your company is mortgaged to the hilt, your boss is not likely to sell off equipment or issue more stock just to give you more money.

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