Business owners have invested a great deal of time and energy establishing, growing and developing a successful business. There then comes a day when it’s time to sell the business, whether that is for retirement or for a career change. After all, the business that a CEO has “raised” as his or her own has a value and a dollar sign attached to it.
Although the majority of CEOs and business owners are keenly focused on the financial aspects of selling a business, there are also non-financial aspects that are equally important for a business owner to address and that shouldn’t get left behind. If these areas aren’t addressed properly, then they can leave business owners and CEOs feeling, well, a little remorse.
We outline below some of the common non-financial aspects and feelings associated with selling a business, and why they are important to consider:
Identity Crisis – Business owners and CEOs may not realize how much of their identity was associated with a particular business until after the sale was finalized. In fact, most business owners and CEOs don’t realize how quickly their identity becomes wrapped up within the business – and how unaware they are of it even happening.
Control Freak – After investing so much time, energy, money and other resources into a business, a feeling of loss can instantly follow the sale. This can leave business owners and CEOs feeling a loss of control, a loss of identity (as we mentioned briefly in the above point), and even a certain level of disappointment.
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Guilty As Charged – If a business owner or CEO decides to sell a business, and is disappointed at the final sale price and agreement, then he or she may not only feel guilty or angry at oneself for perhaps “settling” on the sale price, but he or she may also feel guilty about the potentially negative impact this decision can have on his or her family, employees, the community or other key stakeholders.
A business owner or CEO may feel like he or she should have been better prepared, more knowledgeable of the potential outcomes or have considered all angles of the deal before committing or agreeing to a particular sale.
Avoiding Seller’s Remorse
Unfortunately, business owners and CEOs rarely get a second chance at the decision to sell or keep a business. This is why it’s important to consider all angles and potential impacts – both positive and negative – before deciding to sell a business.
Here are some steps and tips business owners and CEOs can take to avoid seller’s remorse:
- Think about what you want to do after selling a business and how you will re-focus your time
- Spend some time away to gain the necessary time and space you need to realign your new identity and goals without your business
- Calculate your personal expenses and how much money you will need to gain from the sale of the business before committing to a particular value or sale price
- Determine how your transition will impact all direct and indirect stakeholders, such as employees, customers, the community and even your family
- Weigh all pros and cons before making a decision
- Take the time to plan all financial and personal aspects of a particular decision – 3 to 5 years are recommended
Fortunately, the power is in the hands of the owner or the CEO, and it is only a decision that he or she can make. Make the best possible choice for you, your family, and the business as a whole, and to ensure that you avoid experiencing seller’s remorse for mergers and acquisitions.
Nate Nead is a Seattle investment banker with InvestmentBank.com. He helps clients, capitalize, sell or grow their businesses. He typically works with companies that have $10M to $200M in annual revenue.