Our deal teams never lose sight of the fact that working with a business owner to plan and execute an exit can be quite challenging, and often these hurdles they have to overcome have little to do with the dollars and cents of the deal.
Most ultimately revolve around the emotions of the owner letting go of his/her company. That is why a recent study by the National Center for the Middle Market (NCMM), entitled “Middle Market Business Owners Remain Inextricably Tied to Their Companies— Even When It’s Time to Sell,” caught my attention.
Here is the important point they made in their fabulous research:
When a business owner sells all or part of the organization into which he or she has poured blood, sweat and tears, it is no surprise the transition is much more than a business transaction. It is an extremely personal event in the business owner’s life.
Indeed, personal considerations impact every aspect of the sale, from key drivers to how owners prepare for the transaction to the concerns and challenges along the way. In many cases, these personal factors bear more weight and affect the sales process to a greater degree than purely business or economic factors do.
Over the years I have had the pleasure of interviewing dozens of Generational clients post-transaction, and nearly everyone has told me that ultimately, the decision to sell (and more importantly the buyer that was chosen) was driven by factors often far removed from the original goal of “getting the best deal possible”. In fact, for most, the legacy of the business and the continuity of the heritage under the new owners, played a much larger role in their final decision.
So, I always advise business owners to closely examine their motivation before moving forward with any buyer. Who do you want to leave the future of your business to, even if you sell for more than you thought possible? What legacy do you want to leave for your community and associates/family?
These questions are key, but unfortunately do not get addressed too often until the end of the exit planning process. If you address them earlier, as the NCMM study suggests, you will have a much more enjoyable closing for you and your business!
To find out how the Generational team of exit planning leaders can guide you through your decision-making process, give us a call at 972-232-1121 or visit our website and leave us your contact details.
And remember that the legacy you leave may become the most important motivation to you in the 11th hour before closing. This is how Generational Managing Director, M&A, Ahmad Behjati, was quoted in a recent press release on the close of Fairchild Auto-Mated Parts:
“It was clear from the beginning that Mr. Thompson’s ties to his community were profound, and we made every possible effort to keep the business operating from its current location. At Generational Equity, we strive to preserve our clients' legacy so it may continue serving the community that made their success possible,” said Behjati.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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