A recent New York Times article, Selling Your Business Involves More Than Money, accurately describes the difficulties and dangers small business owners face. In addition to highlighting many of the issues we regularly explore with small business owners who are seeking to sell or otherwise monetize their business, these facts serve as an implicit rejection of traditional financial planning’s purely money-centric approach. These tales of regret make clear that the once-in-a-lifetime opportunity to sell your business for top dollar is fraught with challenges, even for the most savvy, successful owner.
The statistics are daunting. A 2012 PricewaterhouseCoopers/Exit Planning Institute survey of former business owners found that 75% of owners who sold their business were dissatisfied a year later and only 5% were happy with their net proceeds.
As Terry Mackin, managing director of M&A for a business brokerage explains:
Selling your business is not all about the financial side of it. Most [business owners] are focused on the dollars, initially. They want us to tell them how much their business is worth. But they find there’s an emotional part to this.
We couldn’t agree more. For too long, too many experts – including some lawyers, CPAs, business brokers and investment bankers – have focused exclusively on the financials. Thus, when negotiating a sale, business owners who don’t look beyond money can become confused, paralyzed, or full of remorse.
Fortunately, the experts are beginning to realize these important factors:
Business owners have many alternatives to an outright sale
Unfortunately, like the owners in the Times, sellers often discover better options than selling after it’s too late. In reality, there are a myriad of liquidity opportunities they may never discover. The solution: start exploring your options early — ideally years, not months before you’re ready to exit. By acting early, you can better position yourself to achieve all your goals, not just cash out.
Most business owners also have non-financial concerns
When selling your business, getting top dollar is important. Yet it’s also crucial to understand how a particular deal can affect you & your family, your employees, and your taxes. By focusing solely on the sale price, you may make a deal you later regret .
There’s an undeniable emotional component to selling your business
Positioning monetary gain ahead of every other human priority or desire and ignoring the innate biases that can cloud our judgment can lead business owners to make deals and decisions they later regret.
At GV, our “Strategic Liquidity Services” team uses principles from Behavioral Wealth Management and a clearly defined process to help business owners select a liquidity path. Our goal is to help them avoid the financial hardship and lifelong regret that so many business owners experience.
If you’re thinking of selling your business — whether now or at some point in the future — you can read about GV’s Strategic Liquidity Services and reach out here.