Are You Ready to Sell Your Business? How to Get It Right!
Business creators reach a point where time catches up with them. It has to. Early in my career, in the ‘80s, I worked with a lot business owners of “the last generation”. WW II veterans, tough as nails, they often had a couple of fingers missing from when they had started out on the shop floor. They were secretive, suspicious, controlling, unreviewed, successful, and powerful!
Today we have many first-generation entrepreneurs and a few sons and daughters of those who started back in the last century. Today’s versions are little different perhaps, but their worlds are much the same.
A move from the known to the unknown evokes the ire of powerful forces. Those forces, implied in the preceding, are anchored deep in the internal bedrock. They act as an undetected copilot. The problem is, that copilot is trying to fly the wrong plane, in the wrong way, at the wrong time. This applies to virtually any big change from known to unknown. Job, city, relationship, selling a business, all of the above. These forces cause millions of people every day to stick with something unquestionably not right for them, but at least they know what it is! Better to just avoid that scary unknown, or put it off indefinitely….
Here it is straight out. WE OFTEN MAKE WRONG DECISIONS, SHORT CHANGING OUR DESIRED RESULTS, BECAUSE WE ARE OPERATING FROM FAULTY CIRCUITS.
In the context of the business owner, he or she may have most of the facts. He understands the offer, the deal, and the business he is selling. But that information, that which is available and obvious to them, is only part of the equation. What about the information to which he is utterly oblivious?
A common story makes the point. I’ve seen this a million times. (Well, I exaggerate slightly.) Those who have been involved with selling companies will readily relate. Jim is 64 years old and “ready” to sell. The only catch is he is absolutely dug in on a sales price of $40 million. To most everyone else, the fair market value of his company is in the range of $30 million. And, that’s a slight stretch. So, a deal that should get done can’t happen.
What comes next? Jim gets older. In my experience, he gets further away from that $40 million, not closer to it. Life is a lot less fun than it used to be. He’s tired of the decades of dirty hard work. Things go downhill a little – or a lot. The economy cycles the wrong way.
Recommendation #1: Jim should hit pause, clear the decks, and start all over. Forget about numbers for a minute. Forget about things like taxes. I’d ask Jim to do a lot of contemplation work, and pretty fast. Of course, this is not the first time he has thought about most of these. But, I’d try to help him do it without the baggage. To suspend those forces within – fear, pride, whatever they are - that cloud his clarity.
What does he want his life to look like? What is it now? How does he want to spend his time? What would make him really charged up and happy every day? What if he sells? What if he doesn’t?
Recommendation #2: Focus even further on life after the event. This part of the “unknown” picture is really big and the stage for these hidden forces to play out. To anyone other than a business owner or those who really get it, what I am about to say might seem is comical. Consider that virtually all business owners have lived with huge risk their entire lives. And, illiquidity. But, the notion of swapping that known thing – the business, with its risks and illiquidity - for that unknown thing – a big bucket of cash – is darn uncomfortable. Known vs. unknown.
This is a glaring example of more work to be done and realities to be better understood. Without a clear picture of what life can be - is meant to be - the odds of getting this one wrong are really high. And, I hope it goes without saying, this involves a great deal more than money.
Recommendation #3: Get real. The business is worth what it is worth. Its value is in no way tied to some goal the seller had. Some goal that is driven by those POWERFUL FORCES, that may or may not be in any way relevant now!
I’ll sum it up like this - Whether we are talking about selling a business, a career change, or any known/unknown decision, we have at least a couple of alternative ways to go at.
1) With the internal baggage. The self-created invisible copilot that influences decisions in ways that steer from the true optimum.
2) We can hit pause and clear the decks. We acknowledge those internal beliefs and judgments. We do what we need to do. We engage with more complete information and clarity. This option will only get to the better answers 100% of the time!
Until we meet, let me know if you like what you are reading. What challenges or faulty circuits are you dealing with? You have reached a certain level of success, but what co-pilot do you have that's flying you off course? I am interested in learning more about what you're dealing with.