Are you ready to retire from the business you’ve built? Maybe a little tired of it? Bored? Burnt out? Sick of dealing with employees and red tape?
These are all legitimate reasons to want to sell, but if they are the only reasons you’re leaving, you could end up regretting your decision. You’ve worked hard to build your business. It probably gives you a sense of purpose and accomplishment. Selling means you risk losing all of that.
One of the most important steps for ensuring you sell your business well has nothing to do with how much money you get for your company and everything to do with your reasons for wanting to sell in the first place.
Push and Pull
Push factors are the things that are pushing you out of your business. Push factors can be anything that frustrates you about your company or takes a mental toll over time. For example, Tommy Berretz co-founded a business in 2005 that maintains commercial swimming pools for homeowner’s associations, water parks, apartment buildings and schools.
The business grew to more than 200 employees, but by 2012, something was gnawing at Berretz. He had heard a statistic from an industry guru who said swimming pool management companies experience a drowning every seven years. Berretz had been in business for 12 years without a major incident. The thought of a child dying in a swimming pool under his management weighed heavily on Berretz and was a contributing push factor in his decision to sell in 2017.
Push factors can be fine motivators, but the secret to avoiding a feeling of loss when you sell is to get clear about your pull factors, too.
For Colorado-based Shaun Oshman, his 30th birthday triggered a unique response. He decided to cut out a set of pictures that symbolized where he wanted to be by the age of 40 and he pinned them to a corkboard as a reminder. Ten years is a perfect time horizon for a vision board because, unlike shorter-term goals, 10 years allows you to imagine something really big. Accordingly, Oshman pinned a picture of a sailboat on his board, which was intended to remind him of his goal for the decade: design a life that would allow him to be living on a yacht by his 40th birthday.
Soon after his board was complete, Oshman set about making his vision a reality. He started a small IT services business that went through the normal growing pains of a young startup, eventually reaching a few million dollars in annual sales.
As Oshman’s 39th birthday approached, he started to ready the company for sale, knowing that he would need to exit in order to fulfill his vision of a life on the high seas—his pull factor. He hired a broker to drum up some offers, and within three months, there were five solid bids ranging from two to three times the seller’s discretionary earnings. Oshman felt a great cultural fit with one individual bidder and quickly agreed to terms.
When I last spoke to Oshman, he was happy as a clam. He was building his spearfishing skills and living on his yacht. He had just celebrated his 40th birthday.
Three times profit might not sound like a great result. But Oshman is satisfied because he wasn’t just leaving his business; he was going toward something new. He didn’t hate his business when he sold it; he liked what he was doing and the people he worked with. But the allure of living life on a sailboat was so powerful that it trumped any sense of loss he felt after selling.
Don’t Go It Alone
The process of selling your company is not a do-it-yourself project. Drumming up offers for your company—as Dan Sullivan, founder of The Strategic Coach, likes to say—is a who, rather than a how question. Instead of investing time trying to figure out how you will reach your short list of potential acquirers, figure out who would be the very best person to do this on your behalf. In other words, hire an intermediary such as a business broker or a mergers-and-acquisitions professional.
As with hiring any professional, you’re in the best position to manage an intermediary if you know what they should be doing. There are some amazing intermediaries out there and some lousy ones, so invest the time to find a good one who appreciates both the science and the art of selling a business.
Start by knowing whether you need a business broker, a mergers-and-acquisitions professional or an investment banker. Interview a few intermediaries, and look for someone who has experience selling companies like yours and a genuine interest in what makes your business unique. Be cautious of an industry specialist if there are only a few acquirers in your industry. As when hiring anyone, check their references and make sure you like them enough personally to want to spend a lot of time together, which you’ll do as you get further into selling your company.
Excerpted from The Art of Selling Your Business: Winning Strategies and Secret Hacks for Exiting on Top
This article originally appeared in the May/June 2021 issue of SUCCESS magazine.
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