Heritage Education and Business Buyout Agreements

Heritage education refers to the purpose of developing a sense of respect, responsibility and concern for local heritage and understanding how it affects sustainability. Heritage sites are acquired, sold, bought and sold again, just like businesses are. There are shared lessons to consider when it comes to comprehensive business buyout agreements and agreements for heritage site success. The following is a discussion of how heritage conservation strategies can parallel structuring business buyout agreements.

A business buyout refers to a transaction where another company or individual(s) acquires or purchases substantially all of the assets and/or stock of another company. It is likely that some element of ‘heritage’ would be lost in a buyout. Notice the use of the word ‘substantially’ in the context of a business buyout agreement above. This is because there are certain elements relating to the business where their continued existence is essential to the success of the business moving forward.

Heritage conservation strategies seek to maintain and preserve culturally significant sites for future generations and in a manner that respects the original building practices. A business is similar in that, much like a building, it has been constructed over time by a team of individuals with varying backgrounds and skills. Moreover, certain elements of the company’s brand are essential to ensuring its success for the next generation.

A key component of a buyout is the preservation of a company’s legacy for its future success. Much like with culturally significant buildings, during a buyout process, care should be taken to ensure that all aspects of the business composition that have aided its success are preserved. In other words, when negotiating a buyout agreement, ensure the elements of success are carefully identified and safeguarded and that they are included in the conditions under which the company is being purchased.

Given the heritage architecture of culturally significant buildings and structures, they are a common target for developers looking to acquire and demolish, refurbish and/or just update the site. Additionally, heritage sites may require updating to ensure compliance with a country’s current occupational health and safety standards. For example, where a business’s premises are leased, the corporate buyer may see value in re-organizing and redesigning the space in a manner that maximizes its success, even to the detriment of the heritage value.

For instance, a cultural institution sought to buy out another institution to gain access to its exceptional collections and skilled staff, for the purpose of launching a successful joint venture. Upon acquisition, the latter institution was no longer able to maintain the status quo and sought to disperse the collections where possible, including to museums. It also outsourced senior managerial roles from the once autonomous institution. The culture clash resulted in the elimination of the institution’s once protected status and disbandment of the senior leadership team. The once independent organization ceased to exist.

Cultural competency has been described as a set of values and associated behaviours, attitudes and/or policies that enable effective interaction and engagement with diverse cultures. In a business it might refer to one’s company that is committed to recognizing, respecting, learning about and valuing the cultural diversity of its customers, including whether and how people from different backgrounds will react to changes that occur within the business.

As elements of a business evolve (be it through a buyout agreement or otherwise) and/or a new business is established (e.g., a start-up or during a buyout agreement), conflict can sometimes arise between its policies and practices and those of employees, customers and/or stakeholders. Such conflicts are often the result of individuals working towards different goals and can occur at any time, often negating the value of the business or otherwise jeopardizing plans for growth.

For example, it is important during the course of a buyout agreement to examine what conflicts may arise following the completion of the transaction and which elements may be considered non-negotiable to the seller. It is important that buyer and seller work together to ensure these conflicts are resolved with minimal disruption to the company’s day-to-day operations and to its success.

Much like a cease-and-desist order that directs an individual or business to discontinue an activity to avoid further infringement, business buyouts are often governed by a contract that comprises of various components. Key components of a business buyout include:

Additionally, during the buyout process, the seller may negotiate to include certain warranties to protect itself, e.g., that the buyer will protect certain staff positions and/or the seller’s intellectual property and/or confidential information. This is often relevant where the seller is attempting to ensure the company’s legacy for its staff, customers and stakeholders.

Often, a business buyout is successful if the company’s board and senior management successfully execute a smooth, step-by-step transition plan as carefully structured in the buyout agreement, particularly if the company is privately held. In a situation where the seller is a cultural institution, it is critical that during the course of a business buyout agreement, the buyer understands how the buyout agreement may affect the institution’s funding and status. In other words, ensure the buyer understands the value of the institution and its relevance for future generations.

Take the example of a cultural institution that housed hundreds of years of well-preserved documents and art work. A private citizen bought out the institution and quickly began to auction off the contents. Following a backlash and outrage from the public, the lie that all items in the collection were on loan to the institution was revealed. This negatively affected the institution’s ability to obtain government funding and receive donations from its stakeholders. Later, an endangered item, a 16th century book was discovered to have been sold twice. Ultimately, the event became known as “the great Canadian cultural scandal.”

The heritage education and understanding research objectives seek to develop a sense of respect and responsibility for local heritage. A buyout agreement provides the opportunity for heritage to inform the business and vice versa. Often business buyout agreements provide representation to those involved in the sale, i.e., owners, shareholders, managers, and all employees whose lives will change substantially as a result. It is important to remind those individuals of the value of the company and to engage them meaningfully in the planning, execution and implementation of short-, medium- and long-term goals following the transaction.