You’ve been running the business for decades, and it’s been a hard slog.
You survived the ups and downs, including COVID, and lately the discussions have started about a possible sale.
It’s time, the family says.
It’s time, you tell yourself.
Things start happening: private equity firms knock on your door and express interest, or you engage with business brokers and M&A specialists.
Then it starts to become real: indicative term sheets, mandates.
You may never have thought about your business in these terms before. For all those years, it was what you did every day, and what paid for all the good things in your life.
But now it’s different. It’s an EBITDA multiple, or the present value of future flows. For you and your family, it’s potentially a large chunk of liquidity.
When push comes to shove and documents are there to be signed that actually move the prospect of a business sale forward, something is holding you back.
It’s hard to put your finger on.
The terms and the numbers all stack up.
Commercially, it makes sense.
Everyone you discuss it with agrees.
Yet something is holding you back.
And that doesn’t make sense.
Questions and doubts come to you:
– What will I do every day after the business is sold?
– Will the future owner look after things – the staff, the customers, the brand – the way I did?
– How will I invest the proceeds of the sale? I’ve never invested in that way before.
While these questions have something of a business lens, they come from a very different place – one that is not well considered when approaching business exit.
When making a business ‘exit ready’, we naturally think of the operational, financial and structural dimensions. But we don’t think about the emotional.
But starting a business is like having a child: we create it, it’s a part of us, and we watch it grow from business infancy to business maturity. Saying goodbye when we exit is hard enough; uncertainty about what the future holds makes it even harder.
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Over twenty years ago, I decided that I didn’t want to be an ‘owner-operator’ until the day I died (like my father). I set about steadily withdrawing from the business operationally, and establishing an advisory board so I could shift to ‘owner-investor’.
About ten years ago, I started building what has now become my third career as a family enterprise advisor.
Now, with the operating business only taking about 10% of my time, and the advisory business my primary focus, the thought of exiting the operating business carries no fear. My next chapter is written.
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Not everyone has the approach, the foresight and the time to plan their next stage of life.
My lived experience growing up in a business family and taking my own journey led me to become an advisor and help others experiencing similar challenges.
The greatest barrier to exit from your business might be the fear of uncertainty as to what comes next for you.
Rather than let those barriers hold you back, deal with the uncertainty and create the future you want for you and your family.
Conversation Starters:
How do you balance the needs of your business and your family?
What is the marginal benefit of remaining an owner-operator for another X years?
What does your next chapter of life look like?
Further Reading:
Family-Owned Business: Saying ‘Time to Go’
3 Challenges To Consider When Transitioning Your Family Business To A Third Party
4 Things About Investing in a Family Business
How to Successfully Transition a Family-Owned Business, According to The Colony Group
Is Succession In Founders’ Economic Interest?
Who Will Inherit the Family Business? Often, It’s Private Equity
‘My father’s succession planning took two decades – now I help other wealthy families’
How to Bring an Outside CEO into the Family Business
Workers Stick with Family Businesses for Generations, Family Business Study Finds
The Benefits Of Turning A Family Business Into The Business Of Family
Should You Treat Your Family Business Investment Like You Treat Your Stock Portfolio?
