The data is pretty revealing, and survey after survey tells us the same trend: Most business owners believe that exit planning is important, but few actually do it.
Selling a privately held business is far different than doing the same with a large public entity. Although emotions come into play under both scenarios, the sale of a family business is far more psychologically challenging than anyone can imagine until they go through it.
I once had a dealmaker tell me that he saw himself as more of a family counselor/marriage counselor than a financial guru. He had just closed a deal and had spent the last three months of the process just keeping the husband and wife together so the deal wouldn’t fall apart. Sadly, once the transaction closed they did part ways, but they did so in a much better financial position than they would have been in if the divorce had scuttled the deal.
This is just one example of how important it is to thoughtfully consider the timing of your exit and to start the process as early as you can so that you, your partners, and family members can all start internalizing the concept of an eventual partial or full exit.
We meet with business owners weekly and procrastination is one of the major hurdles we have to help business owners overcome. One thing to keep in mind: Starting to plan your exit doesn’t mean you must exit right away. In fact, since the process is a journey, not an event, you shouldn’t even think about rushing to close a deal.
Unfortunately, that is the trap too many business owners fall into: By procrastinating they often end up running a fire sale, accepting the first offer they get, at terms often not favorable to them.
Remember, there are two types of business owners:
"There can be a hesitancy to run a sale process for a variety of reasons. The common psychology is to procrastinate and unfortunately often it is too late by the time owners decide to sell. The best time to sell is when a business has an upward trajectory and there’s a runway for growth and a reason to be optimistic."
"But that is a hard time to walk away. A lot of owners can’t, and they stay on too long and they wind up going to market with a challenging story rather than a growth story. But I talk with a lot of owners who have sold and then are sorry they didn’t do it sooner. There is life after a sale."
I have bolded that last sentence above to emphasize a point that I hear all too often when I meet with our clients post-sale: I had no idea how much life I was missing out on because of the daily pressures of running my business. In fact, here are a few of them discussing the realities of life post-close:
This is just a small sampling of clients who nearly unanimously say the same thing to me: "I am so glad that Generational Equity was there to guide me through one of the most emotionally and psychologically challenging processes I have ever been through".
As one owner once told me, "I was great at running my business but I had no idea how hard it was going to be to actually find a buyer and close a deal. I couldn’t have done it without Generational Equity."
What is Your Reason?
Now many of you may have what you consider "valid" reasons for procrastinating regarding your exit plans. For some it might be that you are too busy running the business to even consider an exit plan. Others, it might be that you feel you are too young and you can plan later. Some may believe that you should wait until the "time is right" to begin looking for a buyer.
No matter what reasons you have, consider this: Odds are good that if you continue to procrastinate, external forces may cause you to move much quicker than you intended. Here again is one of our clients talking about his wake up call:
Sadly, history is littered with business owners who put off exit planning only to be forced into it, taking the first (and only offer) they get, and regretting it later as they contemplate how much sweat equity they lost by not planning.
The good news is that Generational Equity and its team of exit planning professionals are here to help. We recognize that exit planning is important and starting the process is the most difficult first step anyone can take. So we are here to help you reach that point and begin the journey. One of the most important parts of our process is simultaneously helping the business (and the owner) become "buyer ready".
If you would like to learn more about where to begin your journey, you should make plans to attend a Generational Equity exit planning conference. Our award-winning meetings are designed by business owners, for business owners. You see most of our conference leaders were once in your shoes: Running a highly successful business, but realizing that an exit strategy was needed.
You can find more about our conferences and what you will learn here:
As the author Lewis Carroll once said, “If you don’t know where you are going, any road will get you there.”
Don’t make that mistake with the most valuable asset you own: Your future!
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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