We live in an Age of Entrepreneurship where more businesses are started, bought, and sold than at any other time in history. And one of the core beliefs of this Age is building a business whose exit plan is an acquisition. This buy-out is meant to be the “finish line”, the “ultimate goal” so one can cash out and live large right? However, over the years, as business brokers, we’ve seen many of the so-called “successful” entrepreneurs plagued by emotional turmoil and even severe bouts of remorse.
Sellers often have to struggle through a broad range of emotions that come about from the decision to sell. As an M&A firm that has facilitated hundreds of deals, we’re convinced emotional preparation on the part of the seller is fundamental and should not be overlooked. Here are five things you can do to help foster emotional readiness.
1. Develop your exit plan before you engage buyers
For the majority of entrepreneurs, the day-to-day operations of the business are so time-consuming they barely have a moment’s respite to think about the details of a potential exit strategy. Yes, perhaps in the back of their minds, they would like to eventually sell the business one day but they haven’t really taken time to think things through.
Unfortunately for most, life doesn’t always afford you the chance to sell when you want. Death of a loved one, divorce, disability, personal or business distress, and disagreement are the top factors that force many to end up selling. And selling under duress will only compound the emotional stress that’s already associated with such a process. Hence the very real need to set aside time when things are still well to develop a thorough exit plan.
2. Acknowledge the source of your current identity so you can build a new one
Many entrepreneurs find their identity in their work and have a strong attachment to it. In fact, according to a 2017 study carried out in Finland, by researchers at the University of Helsinki, MRI scans showed that entrepreneurs are just as emotionally attached to their businesses as parents to their children. This explains the deep sense of loss and period of mourning that often accompanies the sale of one’s business.
The emotional attachment to one’s business is also exacerbated where the business is a generational one that has been in the family for years. Letting go and selling such an entity can wreak havoc not just on you the seller but complicate family dynamics if the business was central to the family’s identity. However, if selling such a corporation is in the best interests of the company, the ensuing emotions will simply have to be dealt with as part of the process. This leads us to the next point.
3. Adopt hobbies and interests beyond your business
Post-sale it might be difficult to still meet up with partners who had become friends through business. Especially those who relied on your business to earn a living. You will probably need a new set of friends and acquaintances. Some of your friends from your current life just won’t feature much in your new state of life because you aren’t running in the same circles anymore.
At least a year before you plan to sell, you may want to start making personal adjustments to cushion what’s about to happen. Adopt new hobbies and pursue interests that you’ve always had but just never made time for. You will need a new community around you to hang out with while you transition into your new life. Joining a clubhouse, church, or volunteering within your community can provide you with a new network of people to get to know.
4. Establish what you will do after the business sale
The proverbial, “An idle mind is the devil’s workshop” rings true even after you’ve cashed probably one of the biggest checks of your life. This does not mean, however, that as soon as you sign the contract you should start on a new venture.
In fact, you should live a little à la former Minecraft Games founder Markus Persson enjoying your new wealth. Yes, travel to Ibiza on a whim if you so wish, throw spectacular parties if you’re so inclined, or outbid celebrities to buy luxury homes. Recover from the burnout.
BUT, you must have a post-sale plan otherwise like Persson, even after selling your business to Microsoft for a record $2.5 billion you’ll end up depressed and taking it to Twitter to reveal how you’ve “never felt more isolated”.
5. Find a trusted team of advisors and support system
This is probably one of the most important points to take note of. We’re not islands; we live in a community with others. Being able to express how we feel especially around such a life-changing event with people who’ve facilitated such deals and who specialize in this area in the form of M&A advisors is critical for your mental health.
Family and friends can offer a listening ear when things get tough – as they probably will over the course of the months. And their support will prove invaluable. Talk to your spouse and or children before the sale so they will know the stress you’ll be under and can offer the support needed as life transitions for all of you.
Finding business people who’ve been where you are and can talk to you about how they emotionally dealt with selling their business and moving on will be therapeutic.
Discuss selling a business with a professional business broker
analyzing target opportunities, and developing acquisition strategies, our expert team can assist in various capacities. Contact us to learn more about how Sun Acquisitions can help you during the buying and selling of a business.
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.