Selling or transitioning your business can lead to financial reward, security and a sense of accomplishment. So why is it that more than 75% of business owners who sell their businesses experience profound regret within a year after the sale?1 Are there steps a business owner can take to create an exit plan they feel good about? Let’s look at a few common regrets after a sale and suggestions for how to address them.
Selling too soon
Some sellers realize too late that what they loved most in life was owning, running and being a part of their business, and wish they had not sold it just yet. It’s a tough regret, because there are rarely any chances for a do-over.
Suggestion: Discuss succession planning ideas with family or key employees early in the company’s life. Take time to visit with trusted advisors to plan for “what-if” transition scenarios. Give yourself years, not months, to develop transition and contingency plans for your eventual departure. This will help you, your family or key employees to avoid ever being forced to sell under duress.
Leaving money on the table
It is common for former business owners to second-guess whether they could have gotten a higher price. In some cases, owners realize during or after the deal that they may not have been competently advised and made decisions that cost them dearly. In those situations, owners may discover they could have prevented a financial loss by preparing for the exit earlier or by executing it differently.
Suggestion: Engage a strong team of competent professionals who can help you, your family and key employees (if applicable) prepare the business for sale and execute a deal. This includes but is not limited to legal, tax and business advisors. Consider visiting with former business owners you trust in or outside of your industry to gain insight from their own business sale experiences.
Not feeling organized for an unsolicited offer
Some business owners become disoriented and feel unorganized to fully capitalize on an unsolicited offer, especially when the offer seems too good to refuse. Not being prepared when such an offer comes in may lead to a failed deal.
Suggestion: Proactively understand the value of your business and be ready to sell at a moment’s notice. Before you receive an unsolicited offer, take the time to make your business more marketable and valuable by learning to look at it through the eyes of a potential buyer or investor. If you do receive an unsolicited offer that catches you flat footed, leverage your team of competent, trusted advisors to quickly get you an objective picture.
Losing your identity and purpose
After spending years or decades building a business and being known in the community for that, owners may find that their persona is tied to being a business leader. If people no longer see you as such, that can lead to a sense of professional and personal loss.
Suggestion: Expand your identity beyond your business. Before moving forward with the sale, have you reflected on a vision of what you want your life to be? What makes you happy and satisfied? Try thinking about the sale as a chance to give back to your community and provide opportunities to up-and-coming entrepreneurs. You can also serve in some capacity on community boards or partake in local mentorship programs to keep you connected.
Selling your business can be the biggest financial event of your life, impacting your financial wellbeing and sense of success. Be sure to explore your options and develop a transition plan that helps you avoid regrets. For help preparing for this important milestone, reach out to a Bremer Wealth Advisor.