Selling your business is rarely an easy process, but for some business owners, this transition is excruciatingly painful and leaves them feeling unsettled and unfulfilled. It’s understandable – you’ve spent your life building this business into a successful product ready to be sold; letting go can be a challenge.
Yet for some, letting go is cathartic. Somehow, these owners are able to embrace the transition period and avoid the remorse or feelings of loss that others are known to experience. How is this? What can business owners do to make their exit smooth and successful, so that they leave feeling – dare we say it – exhilarated?
There are four stages of the exit process that all business owners must take in order to ensure their transition is successful.
1 – Exploratory
In this stage, your duty is to explore all of your possibilities for your exit. Do you plan to liquidate? Or do you prefer to sell it? If you prefer to sell it, whom would you sell it to? Would it be a family member? A third party? Perhaps you’re interested in selling to an employee. Then again, you may prefer to sell to a third party. If that’s the case, this raises the question: would you prefer to sell to a private equity firm, a competitor, a larger company looking to expand? Is it important that your company culture be preserved? How committed are you to ensuring your current employees are unaffected by the sale?
The exploratory stage is designed to get you thinking about the inevitable sale of your business. While some business owners think of this (selling their business) from the moment they launch, others need a little reminder. During the exploratory stage, you may also want to consider the time frame (when you plan to sell) and the amount of money you’d be happy walking away with when the time finally comes.
2 – Get strategic
During this stage your goal is to begin to look at your company as a product. Again, some business owners do this from day one, but that’s not always the case. By viewing your company as a product, you’ll be in better position to make strategic choices that maximize its value.
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A good adage to subscribe to is to always build a business that’s ready to be sold tomorrow. But what does that mean? Well, while each business and niche is unique, certain elements of a sellable business remain consistent. Your end goal is to ensure that you – the owner – are not an integral part of the company’s day-to-day operations. That means putting into place strategies and systems that make your business a smooth, operational entity (with or without you).
Keep in mind, you may not be interested in selling anytime soon; however, making your business sell-ready not only boosts its value, but it also makes it more productive and efficient.
3 – Executing the exit
All that work you did in the first two stages has now come into fruition as you look to get your deal done. Whichever type of exit you chose (selling to a third party, a liquidation of assets, gifting your business to a family member), now’s the time to go through the process of getting this done.
If you’ve skipped over stage one of the process (as many business owners are known to do), you may begin to feel regret seep in around stage three. That’s because you haven’t given yourself enough time to think through the process; everything feels rushed as you realize that the final stage of the process (the transition) is just over the horizon.
It’s vital that you spend enough time in stage one preparing for this moment – putting into place the steps necessary to make this exit happen successfully.
4 – The transition
We have finally come to the fourth stage of an exit – the transition. The transition stage begins where most people think it ends: completing the deal. But consider that word – transition. The movement from one place to another. That’s the key. Transitioning doesn’t just mean leaving your business. It means moving onto whatever’s next.
This fourth and final stage is not complete until you have fully moved on (both physically and psychologically) from your company, and onto whatever new venture you’re ready to take on.
Commit to each state of the process to minimize seller remorse
The four stages of the exit process are designed to help you ease into this transition and avoid the shellshock that often comes when an owner walks away from his company. Of course, no matter how prepared you may be for your exit, it’s more than likely you’ll still feel at least some form of loss. That’s only natural, but acknowledge it for what it is. For lack of a better term, you’re in a mourning period following your exit. You’ve lost something near and dear to you and it takes time to be at peace with that.
But by knowing well in advance the type of exit you want, and preparing yourself with a transition plan that includes taking on a new venture, you should be able to walk away with a sense of excitement and purpose, as you move onto the next stage of your life.