By Maurie Cashman
â€œWhen one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened.”
–Alexander Graham Bell, American inventor
“What do other owners do after they’ve sold out?”
“My wife wants to see more of me – but not at every breakfast, lunch, and dinner!”
“I can’t play golf every day.”
Failing to answer these concerns can create waffling, reluctance, and ultimately, an unwillingness on the part of some owners to proceed with planning for ownership transition planning, or seller regrets.
Below are the strategies and results followed by four business owners in planning for their ownership transitions. All four reported that transitioning ownership was the “best thing possible for me and for my family.” That said, each owner approached the ownership transition plan differently and each has pursued different interests in its aftermath, to avoid seller regrets.
Jack was 62 when he sold his high-tech manufacturing firm. He was prompted to sell first when his accountant introduced Tom to an Ownership Transition Planner who helped him put in place a successor management team. Complementing this concrete Ownership Transition Planning process was Jack’s realization that his emotional connection to the business was loosening. When these objective and subjective events converged, Jack began working with his advisors to sell his business to a third party.
Bob was the 57-year old owner of a successful distribution company that he had started 20 years ago. He employed an ownership transition planner and readied his company for sale. Bob wanted to keep the business in the community and give his employees the opportunity to remain and advance with the company. Part of the transition planning was a discussion of supplier concentration within his business and the risks this might pose. Surely enough, the supplier concentration became an issue for the potential buyer. The issue was resolved by the Transaction Advisor and the business was sold.
Unlike Bob, Dave, the 55-year old owner of a low-tech manufacturing firm was not focused on an eventual sale. In fact, he didn’t want to sell because he felt he finally “had it going just right.”
When confronted with the idea that the time to sell was when there was upside potential, Dave started thinking about the hard times he’d been through. If hard times returned, he wondered if the company could survive and knew that “upside” would be the least of his worries. He, too, made the call to his advisors.
Having all arrived at the closing table via different routes each former owner has found a similar satisfaction in the decision to sell and in life after the sale. Jack arranged his sale so that his employees kept their jobs and gained greater career opportunities. This gave and continues to give him great peace of mind. While he did not have a detailed plan in place for life after the sale, he quickly found new outlets for his energy. He has enjoyed his opportunity to actively manage his family farm. He’s spending time with his wife and family, has time to travel the world, is considering purchasing additional farmland and has taken an active role in charity work. In Jack’s words, “One of the things I appreciate most in this ‘retired life’ is that it isn’t a ‘retired life’ at all.”
Jack agrees with Daveâ€™s comfort with this decision. “Of course I wondered what I would do after the sale because I was in that business for 35 years. But the day I walked out of there I never looked back and I never missed it. Jack is developing an industrial park, expanding his collection of race cars, and taking motor home vacations. He leaves the house by eight each morning and doesn’t usually return home until late afternoon.
Dave anticipated that he’d need a place to go to after the sale. He rented and equipped an executive suite and planned the first three months after the sale and followed the plan carefully. Today, he spends time on his hobbies. He has educated himself about investing, advises other business owners and manages his own portfolio.
Bob remained as the President of the company post-sale. He is gradually transitioning out of the business and comes in when he wants or when requested. This allows him to keep an eye on business performance (a seller note was part of the resolution) and is being paid on time each month on his note. He loves to travel, flying his private plane and spending time with his wife. He recently told me that he is thankful every day for having sold his business when he did.
These owners have no seller regrets. They remain engaged and vital and have moved into a new era, untroubled by financial concerns.