You spend decades building a successful business. When the time is right, you sell the business and retire (or at least take a nice, relaxing break). Sounds like a solid plan, right?
Unfortunately, the reality doesn’t always turn out so happily. According to a 2013 PricewaterhouseCoopers survey of entrepreneurs who sold their businesses, 75% were unhappy with their decision a year later. And only 5% were satisfied with the proceeds from the sale.
Why are so many business owners unhappy after selling? A big reason is that your goal in the sale is very different from the goal of people whose job it is to help you conduct it — the investment banker, the lawyer, the CPA.
Your goal: To conclude an important chapter of your life and set yourself (and your family) up for everything that comes next.
Their goal: To do the deal efficiently, period. Thinking about your deeper satisfaction in the years that follow? Not their job. Heck, it may not even be their responsibility to get you the best price—that may be too much time & work. They want to reach a reasonable financial outcome and move on – preferably as quickly as possible. You talk in terms of security and family; their vernacular is “deal flow.”
In other words, for you, selling your business is the deal of a lifetime. For them, it’s the deal of the week.
It’s not just a business, it’s your life’s work – and your life
Here’s the deal: you’re not just a deal. You’re a living, breathing human being. To be happy, you need a lot more than just the big pile of money your investment banker promises you. You need a sense of purpose, activities that engage you, and a community of people you care about and who care about you. If you’re like most entrepreneurs, the business you run fulfills a lot of those needs. So selling your business can create a big vacuum in your life. It’s that sucking sound many business owners secretly fear most.
Selling your business is a business decision, but it’s also an extremely personal one. If you approach it only as a deal, you’re leaving out the personal variables in the equation. And aligning all those personal variables can make all the difference in how you feel about the deal down the line.
Selling your business outright may be the right option for you. But then again, it may not. Maybe you’d be happier staying involved in the business in a flexible way. But try telling that to some investment bankers and watch the blood drain from their faces. That only makes their job harder, since it makes the deal more complicated.
Build a liquidity plan that suits your taste
But the truth is that there are as many ways to generate liquidity as there are flavors of ice cream. But average deal professionals probably won’t (or can’t) point out the tasty alternatives to chocolate or vanilla. Most of them approach your deal in a one-dimensional way.
So before you take action, open up the conversation and ask big questions.
- If you were to look back in three years, what has to have happened for you to feel great about the progress you’ve made?
- How do you want to make a difference?
- Where do you want to be?
- How do you want to spend your time?
These questions – and the answers that only you can give – could lead you toward new flavor combinations that give you more satisfaction than you imagined possible. And they won’t make your stomach churn with regret a year later.
The easiest way (for them) to do the deal and the best way (for you) to do the deal are rarely one and the same. You are the only person who can live your life (your CPA isn’t going to live it for you). So it’s up to you to make sure that the deal that’s crafted works not just on the balance sheet, but for you – in every way possible.
Your lawyer and banker may not leap for joy at the prospect, but trust me, they’ll deal with it. After all, dealing is what they do best, right?
One last note: You can also engage an outside third party (like my team at JOYN) to help you work through these questions so the deal pros don’t have to. It’s never too late to start a conversation, especially because there are ways to generate liquidity long before you start thinking of a sale. Learn about our Strategic Liquidity Services or RSVP for our May 12 lunch for Atlanta business owners.