Selling a Business: The Grieving
20 February 2023: Selling a Business: The Grieving
Selling a business has impacts that most business owners often don’t recognize until the business is sold.
Such impacts include tax ramifications, how to invest the capital netted at closing and finding something to fill the seller’s sudden free time. But arguably the most significant impact and the one that is least likely to be anticipated, let alone discussed, is grief. Selling a business more often than not involves grief – and in some cases, lots of it.
In the days and weeks following the sale of a business – especially if it’s the founder who’s selling – the most surprising and totally unexpected emotion most founders experience is grief. And it’s extremely rare for former owners or many advisors to talk about the grief a founder or long-time owner will likely experience when they sell their business. And the likelihood that the seller will experience some level of grief is especially high if they’ve been in the proverbial trenches for many years growing that business and getting to know their customers, employees, suppliers and even others in their industry on an intimate level.
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When a founder or owner has been growing their business for any period of time, they are constantly immersed in the business’ performance. From contract negotiations, taxes, regulations and the cost of goods to sales growth, customer satisfaction, employees and competitors; business ownership is a 24/7 affair. Once all that disappears, the seller can experience a sense of isolation for which they are totally unprepared.
Unfortunately, this is a very common phenomenon. According to studies by The Exit Planning Institute, 75% of former business owners regret selling their business. This regret is for several different reasons.
One is that the seller finds that the net proceeds at sale are not adequate to keep them in the lifestyle they had anticipated. Many, especially the sellers of Main Street businesses, discover they have to go back to work and that after being an owner for years, being an employee is a difficult and sometimes impossible transition.
Another is that the seller had not prepared for life after the sale. They are suddenly blessed with plenty of time to do whatever they want but they have no idea what they want to do or how best to fill that time. This is most often the case when the seller had not anticipated selling – the business was not for sale but someone showed up with a fistful of dollars and convinced the owner that it was. This is exactly what happened to me in the mid-’90s.
But, by far the most oft-heard regret is that the business was the owner’s “baby”; a nearly human thing that, at the time of sale, is actually considered part of the owner’s family.
Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.
Those of you who have followed this blog for a while know that I experienced this exact scenario, a tale I relate here. The emotional impact of that event was immediate, profound and deeply disorienting. My escape from that deep funk took time and work.
Being a business owner – an entrepreneur , if you will – is incredibly defining and your business can provide markers along the way that can specify how you’re doing and define how you perceive yourself. And others – family, friends, associates, even golfing buddies – who for many years knew you as “the owner of ABC, Inc.” – perceive you differently when you’re no longer that owner.
Business owners are like an exclusive club or fraternity. They are like countless other groups that have specific or strong commonalities and they tend to associate with others who share those commonalities. As soon as a business owner sells his or her business, that now “ex-owner” no longer shares those commonalities and life can suddenly become uncomfortably isolating.
For those who’ve run and grown a business for any period of time, it’s easy to lose self-identity as soon as the business is no longer theirs.
The Bottom Line
This blog has often focused on the need to have a plan for selling a business and, equally important, to have a plan for life after the sale. Experts – whoever they are – state there’s an emotional exit plan needed when an sale is on the horizon.
But listen to former business owners and you’ll find that the ones who had no concrete plan for what to do post-closing are the ones most emotionally impacted by the sale of their business. I speak from personal experience with this phenomenon.
Some might ask, wouldn’t the resulting significant improvement in my financial status ease some of my disquiet? Though a reasonable question, I can respond without hesitation that it did not. I was emotionally invested in my business. It was how I identified to myself, my peers and the public in general. When I walked into a restaurant, the gym or even the grocery store, I would be greeted with “How’s business?” as often as “How’re you doing?”
When I attended a meeting of the regional chapter of the Chamber of Commerce, the inevitable question was some version of “How’s business?” When I answered that I’d recently sold the business, the hesitant response was a facial expression that always seemed to say, “What are you doing here, then?”
Selling my business was very disconcerting.
Business owners need to be counseled on this issue. Our brokers – and the independent ones we train – are encouraged to use my experience – my story – to illustrate the need for preparing their clients emotionally for life after the sale. But we have to recognize that, even with such preparation, most sellers will still mourn the “loss” of their business – or at least the loss of their identity as the owner.
I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@Wo*******************.com.
If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.
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The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 500 in the world. He can be reached at jo*@Wo*******************.com