Selling a Business When It’s Not For Sale Pt 6:
11 April 2022: Selling a Business When It’s Not For Sale Part 6: The Aftermath
One of the least discussed – and least considered – aspects of selling a business when it’s not for sale is the aftermath. What happens the day after closing? Even with business owners actively looking to sell, few have given much thought to “what’s next”.
This is the sixth and final installment in our series on selling a business when it’s not for sale. In previous installments we discussed The Offer, The Value, The Negotiation, The Due Diligence and The Financing. This installment is about the aftermath; how the seller’s life abruptly changes and how to prepare – to the extent preparation is possible – for that sudden dramatic and unsettling development of no longer being a “business owner”.
I speak from personal experience.
In the mid-’90s, I sold a business – one that I’d started six years earlier – that wasn’t for sale. Everything I’ve written in this series comes from that enervating ordeal and from my experience advising other business owners and business brokers since founding Worldwide Business Brokers in 2001.
To the business owner who, over many years, grew a business from X to whatever, that business is their “baby”. This is especially true for founders.
Their business is their identity. It’s how they’re known in their community, their church, their day-to-day life. It’s how they know themselves. To a surprising degree, it’s how their spouse and kids are known in their respective circles. The emotional impact of a sudden sale is enormous.
We offer a comprehensive coaching program tailored to Realtors, business owners and anyone interested in buying or selling a businesses.
If you’d like to learn more, email me at jo*@Wo*******************.com
The day after I closed on the sale of my business, I woke at about 5.30 AM as I had for years. I made some coffee, read two daily newspapers, had some breakfast and went through my entire morning routine without much trauma – until about 7.15 which was when I customarily left for my 15 minute ride to the office.
Suddenly, I had nowhere to go and nothing to do. This is the business owner’s reality when they sell their business when it wasn’t for sale, because rarely has any planning whatsoever been done.
What’s Bugging You?
In this situation, there are two major causes of distress.
The first is the sudden change in the seller’s self-identity. It dawns on them that, “I’m no longer the owner/president/whatever of ABC Widgets. So, what am I? How do I respond when someone asks me, ‘How’s business?'”
Two or three days after I sold, I was in the grocery store and ran into a friend who asked how things were going. I was still in a daze. The only response I could muster was, “I just sold my business.”
That response was apropos of nothing; not what she asked nor anything else that we had recently talked about. I left the store quickly and tried to figure out what had just happened – and how to keep it from happening in the future.
The second significant cause of distress is that most people – business owners in particular – need to be productive. They need to have something to do; a reason to get out of bed in the morning.
I suddenly had no purpose.
My business was still young and I had not given even the first thought to selling. That means that I also hadn’t given the first thought to what I’d do next.
Now, some people – especially those that have never been through this experience – will say, “Yeah, but I’ll bet that newly-bulging bank account provided a bit of succor!” Well, yes, to a certain extent.
I knew I would no longer worry about the things most business owners worry about constantly; hiring the right staff, finding customers, making payroll. But that wasn’t because I had the money! It was because I no longer had any staff positions to fill, no products to sell and no employees to pay!
Businesses that would normally take nine, 12, 18 months to sell, can close quickly when a suitor who is determined to buy arrives suddenly and unannounced. My deal closed in 60 days. Given the time required to prepare the business for the turn-over, it’s nearly impossible to prepare the seller for the same event; let alone for what are likely to be the barren, desolate even scary months the will follow.
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Don’t Miss Out on the Coming “Silver Tsunami”!
My experience was somewhat unusual in that I was still single and childless. I owned a condominium that would be cared for by the maintenance crew. I had nothing to tie me down.
After two weeks of moping around, getting more and more depressed, I decided to hit the road. I sat down at my computer and started searching.
It was in the middle of a cold and wet winter so I chose someplace warm; Mexico’s Baja Peninsula. After a couple of weeks on the beach enjoying the sun, the scenery, eating local lobsters and reading a couple of books I’d brought with me, the solution arrived with a jolt. I had the dough and I had the time. I was going to do some serious wandering.
Three weeks later I landed in Paris, leased a car and spent a good portion of the next four years getting my passport stamped.
But most people don’t have that freedom. There are kids, schools, a spouse, commitments that, in many cases, stand in the way of such a option.
But interestingly, my solution only softened the blow. It didn’t eliminate it.
Yes, my mind was again filled with challenges; negotiating border crossings and currency exchange rates; new languages, new foods and new customs; everything from acquiring the appropriate gear for an Alpine glacier visit atop Mont Blanc to where to get my hair cut in Prague. But notwithstanding all of that, it seemed like every other week I got an idea for a business. Eventually, I realized that I, like pretty much every other business owner that I’ve ever met, had to be productive. I had to find something constructive to do.
The Bottom Line
Selling a business that’s not for sale generally means that the business owner is not prepared to sell – but, as happened in my case, buyers, without much effort, can persuade the owner that their business really IS for sale. The owner just didn’t realize it. And, as described in our earlier posts about value and negotiations, being unprepared puts the owner at a distinct disadvantage.
The previous posts in this series all discuss extremely important issues that must be dealt with in the event that someone – or some M&A firm like us – shows up at your door to say they want to buy your business. But all those previously-discussed issues, while seemingly overwhelming when you have to face them, are short-term concerns. The aftermath is not short term – and it will impact you emotionally FAR more than any of the others.
I’ve often said and written that selling a business ain’t for sissies. That is particularly true when someone shows up out of the blue and says they want to buy yours.
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.
This week one of the inquiries we received was from a small private equity group in the mid-west of the U.S. looking to acquire U.S.-based traffic control companies and manufacturers of equipment monitoring platforms with between $1M – $%MM in Discretionary Earnings.
If any of you know of something that might fit, please let me know.
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The author is the founder 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 1,000 in the world. He can be reached at jo*@Wo*******************.com