The first thing you need to do is remember that the future, while guaranteed, is uncertain. Once you give up the controlling stake in your business, you are no longer the sole determinant of its future. Pegging your satisfaction with a sale to what might happen six, twelve, or twenty-four months down the line is, sadly, a recipe for disappointment. You no longer get to shape the future.
This means you need to engage in some endpoint thinking. The sale as terminus. Even if you intend to stay on post-acquisition, the new entity is no longer the same one you built. It will operate by a new set of rules, standards, and expectations. As such, don’t assume that past is prologue, or even that a buyer will hold true to pledges made during a sale that were not also included in any contracts or agreements.
For me, selling my business meant divorcing myself from outcomes. Whether they took the business and scaled it to 10x the revenue I was ever able to achieve or spurned long-time clients in a way that would damage the reputation of what we built, it had to become insignificant to me.
And to make that possible, I did this next thing.
What defines a successful exit? There’s no one answer. In fact the only way to answer that question is with a question: what does the seller need to feel satisfied?
Exiting is not just about the sale price. Sure, money talks, but selling a business is selling a piece of yourself, and a career and personal inflection point. Money is but one factor alongside these.
If you’re considering an exit, do you know what these other factors mean to you? Do you know what the perfect deal looks like? Think of it this way. You wouldn’t start building a house without blueprints, and the same goes for trying to sell a business. You need to have something to guide your decision-making.
To aid me in that effort, I took the time to make a rubric with a list of criteria the deal would have to meet to satisfy my needs. Because I took the time to do that I can look back without regrets.
Creating this started with cracking open my journal and free-writing the deal must-haves that came to mind for me. The major items were:
- A senior level role for me
- Opportunities for personal development and growth
- Mentorship from senior leadership
- A home for as many of our clients and employees as possible
With this framework I was able to avoid wasting time on deals that were not going to be a fit for my needs. Understanding your needs from any deal will help protect your time just the same.
Further, having this in mind helps to limit post-decision dissonance. Just like the feeling of buyer’s remorse you may have after buying that expensive watch or pair of shoes, it’s possible that you may feel you closed the wrong deal minutes or months after signing your final paperwork. However, if you have this deal scorecard to look back on, you can use that to help keep perspective, reminding yourself that this deal was the best for meeting your needs, and that the future is always unpredictable.
For me, I could look back on our deal, especially when compared to others we were fielding, and assuage my displeasure at the endgame by reminding myself this deal was the only one that offered everything I needed to feel comfortable signing on the dotted line. Any other offer would have involved a compromise, and even still I would have had just as much control over whether or not the agency was still around in ten months as I did in the deal we took.
As part of considering what you might need to close the deal, I do want to pass on a piece of wisdom another founder shared with me when I was making my deal scorecard: secure as much cash as you can upfront.
As I’ve made the point a few times now, an acquirer might try to change how the new business operates at any point in time. When that happens, your ability to hit the metrics that might be tied to your payout are immediately in jeopardy. While you can certainly negotiate your way to getting that money, or seek it through legal means, that’s never something you want to have to rely on. Rule of thumb: get enough cash upfront such that if you never see another dime from the deal, you’ll be okay with it. In my case, my partners and I were able to secure 80% upfront, a hefty sum. As a bonus, I was able to negotiate half of the final 20% as part of my severance agreement.
Our deal was primarily one to acquire the portfolio and the people. When we were announcing the sale, clients and customers were fairly easy to assuage⏤we already closed a deal with them once, now we just had to do it again. People…well, that’s a whole other issue.
When a transaction occurs everything is up in the air for a team. They don’t know what this will mean for their job titles, responsibilities, pay, or prospects. Most likely, they’ll all use this opportunity to freshen up their resume. Can you blame them?
My team was looped into the sale process three months prior to the deal closing, when terms were still being negotiated. It was a risky move, and one we tried to, quite frankly, avoid. This worked for us because we knew there’d be no redundancies to deal with. While there was uncertainty about moving to a new employer, everyone knew there was a job for them if they wanted them.
But even still, because a transaction was outside their control, we needed to do our best to make them feel invested in the process. In an effort to create transparency around the deal timeline and going-ons, I delivered weekly updates on our progress. I meet with them one-on-one to discuss their concerns and find out what questions we could get answered for them to help ease them into the transition.
Importantly, this didn’t end when the deal closed. In fact, that was just the end of the beginning. How we supported our people during the transition phase was just as important.
Now, we were adapting to an organization with its own culture, operating procedures, tech stack, and vocabulary. It was unsettling and uncomfortable for them to adjust to, despite being open-minded and adept at doing just that. To support them in this, through the first two months of our transition I held all-teams for my staff on Fridays to share any lessons I had learned that week, as well as to coach them on how they could work to maximize this new experience. Many of them turned those insights, around things like advocacy and internal politics, into action.
No, not a banker or business broker. I’m talking about a therapist. A mentor. A friend. Find someone, or someones, who can be an ear during this process.
The decade of my life leading up to our sale had been defined by the business we started and scaled. We wore titles like Founder/Partner/C_O. Those would still be true, but they would be past and not present. The situation is ripe for an identity or attachment crisis when we have to let go of the thing we’ve invested our spirit and soul and body in building. I expect you’ll experience that just like I did.
Questions you might grapple with include:
- What do I want my life to look like post-sale?
- What is my relationship to the work, the people, the business?
- How do I say goodbye?
- How can I process my feelings if I don’t like the new direction?
- What next?
Having a trusted communication partner during all of this will help you externalize and unpack everything you have going on inside your head.