Mastering the Exit: Addressing This Pain Point Upfront Will Help You Sleep Better At Night
Walter Adamson
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Lists of pain points for owners selling their businesses are plentiful and typically look like the one below. But in my experience, one of these points causes more sleepless nights than all the others combined. Here's a list:
Articulating your purpose requires a clear framework
Which one causes the most pain, distraction, and drift? The need for the owner's personal vision.
As an owner who has devoted a large part of their life to building the business, the sale of your business is the realisation of your life's earned value - in dollars and cents.
However, all owners have a larger "purpose", which runs deeper. Therefore, it is absolutely essential to clarify your deeper purpose up-front. Otherwise, your exit path will inevitably hit a few muddy patches where things bog down as you deal with the emotional fallout of your journey.
It helps to have a clear framework for thinking this through, starting with understanding the difference between goals, purpose and vision.
For instance, your goal might be to retire, and your purpose is to sell your business to a strategic acquirer.
However, many owners have a larger "purpose", which is greater than just realising selling their business.
⇒ THE BIG IDEA: A concept that is bigger than purpose and goal is the concept of vision. A vision is a big-picture, long-term view of what a person or organisation wants to achieve or become. It provides a guiding principle and a sense of direction that informs and aligns goals and purposes.
Your vision may be for the company to continue growing and provide more employment opportunities for highly skilled engineers and technicians.
While goals are specific and measurable targets that help you achieve your vision, and purpose is the underlying reason or motivation for pursuing those goals, vision is the more broad and aspirational concept that defines what you want to happen or be known for in the future.
When you have clarity around your personal vision, you can add extra goals that you would like to tick off that will modify how you go about achieving your purpose, i.e. to sell to a strategic buyer.
By addressing these types of questions, you can best achieve a successful transition that honours your legacy, cares for your employees, and continues to contribute positively to the community - and allows you to sleep at night.
To satisfy your vision ask yourself these six questions
Q1: What do you want your legacy to be by selling to a strategic acquirer?
A: Your legacy can be defined by the seamless integration of your business into the buyer's operations, leading to the creation of new synergies, market opportunities, and technological advancements. To ensure this, focus on finding a buyer who shares your values and is firmly committed to maintaining your company's unique culture, products, and expertise.
Q2: How can you ensure the well-being of your employees (when selling to a strategic buyer)?
A: To prioritise the welfare of your employees, research potential strategic buyers, and evaluate their track record in employee relations, retention, and development. During negotiations, discuss the buyer's intentions regarding staffing and company culture. Consider incorporating employee-related clauses into the sale agreement, such as job guarantees for a certain period or commitments to provide training and development opportunities.
Q3: How will key decisions which shaped your culture be preserved?
A: To ensure the preservation of key decisions, create a comprehensive transition plan that outlines your company's unique value proposition, operational processes, and competitive advantages. Share this plan with the strategic buyer and discuss their intentions to maintain these critical aspects of your business. You might also consider staying involved in an advisory capacity post-sale to help guide the transition and preserve your company's strategic decisions.
Q4: How can you maintain the company's positive impact on the community?
A: Identify potential strategic buyers who share your commitment to social responsibility and the community's well-being. During negotiations, discuss the buyer's community engagement plans and intentions to uphold your company's existing philanthropic initiatives. Consider including the sale agreement clauses requiring the buyer to maintain specific community initiatives for a specified period.
Q5: What role do you want to play post-sale?
A: Consider whether you want to remain involved in your business in some capacity, such as a consultant, board member, or advisor. Communicate your desired role to the buyer during negotiations and ensure they include this in the deal terms. Your continued involvement can help smoothen the transition and preserve your company's values and expertise.
Q6: How can you prepare your business for a smooth transition?
A: To prepare for a smooth transition, professionalise your business by implementing robust financial and operational systems, strengthening your management team, and developing a comprehensive transition plan. Communicate regularly with the buyer to ensure alignment on expectations, goals, and timelines. Additionally, consider offering support during the integration process, such as training sessions, knowledge transfer, and post-sale consultations.
Takeaway - Achieving your vision doesn't mean compromising
You can't guarantee you'll reach your goals. But success is much more likely if you do the work to understand what's needed to get there after you've sold and use this in evaluating the buyer and negotiating the deal.
Exit planning combines business strategy with your personal and financial goals and objectives. Clarity keeps you on the exit path.
Ensure that you consider the full scope of your vision when designing an appropriate deal structure. Remember that making concessions doesn't necessarily mean compromising your ambitions – it may just require extra understanding and effort from both parties.
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This Week's Reading
Two articles from my reading list to help you grow and exit successfully.
Article 1: How to Make Selling Your Business a Fulfilling Experience
K Srikrishna interviewed entrepreneurs from several countries who have sold their businesses over a two-decade period. In this article, he shares three lessons from what he has learned.
With respect to purpose, he says, that the first step to understanding and fulfilling our life's purpose is identifying what we care about most and determining why we do what we do. This awareness begins with our personal purpose – whether spending more quality time with family or simply giving back to society – it plays a critical role in overall well-being and happiness.
To best begin this process, questions should be asked of ourselves, says Srikrishna:
Taking this information into consideration and allowing ourselves the opportunity to explore the potential outcomes each day will serve as a stepping stone on the pathway to discovering our true purpose. Our purpose could include following our passion, working toward environmental reform or striving for social justice. Regardless, it starts with taking time to invest in ourselves with authentic questions that guide us inwardly.
Knowing your purpose will help you resolve your vision in selling your business.
Source: hbr.org
Article 2: The Emotional Impact of Selling Your Business
Selling your business could be one of the most significant changes ever in your life, so it is essential to recognise and cope with the emotional impact it can bring, says Iain McCoo. After investing so much of your time, energy, and resources into growing a business, letting go of that connection can be difficult. However, acknowledging and understanding your feelings is the first step towards managing any emotions that might arise.
Give yourself time to process everything before, during, and after the sale.
It's natural for you to feel overwhelmed or uncertain about this change in your life; these feelings are normal. Talk to someone you trust - a friend or the broker handling the sale - or make plans for the future to help you adjust. Don't forget about those around you, too; involving family members in decision-making processes can help them feel included and help you gain perspective on potential outcomes.
Source: business-partnership.com
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This Week's 3 Business Books
Free for you as a subscriber to my newsletter: Three of the world's most essential and popular business books in acclaimed 12-minute videos. Listen, or watch and listen to take advantage of another big idea.
Book 1: Do The Work, by Steven Pressfield (Watch or listen on Monday - Tuesday)
Are you your own worst enemy when it comes to work and deadlines? Ever started a project but never finished it? Find out how to get out of your own way and Do The Work in this video.
Book 2: Moneyball, by Michael Lewis (Watch or listen on Wednesday - Thursday)
Sorry, no Brad Pitt here. Just the remarkable story of Billy Beane and his goal to win in baseball's Major League with one of the smallest payrolls. His solution? Stats! Ready to play some ball?
Book 3: Mindset, by Carol Dweck (Watch or listen on Friday - Sunday)
Change your mindset, and you will see the world differently and help yourself make positive changes in your life. True transformation really is all above your eyebrows.
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Keep winning, Walter
P.S. If you know you’re ready… it might be time to explore my Proactive Exit Mastery model, to see how you might capture the ultimate exit value for your business. If you'd like to know a bit more, just message me or comment below with "Ultimate Exit Value".
Trade Ambassador to the Government of Japan at HELIOSPHERE Science Project RES314
1yInteresting, thanks for sharing