After the Sale
Note: The following advice applies only if the seller has owned the business for a significant period of time and is likely to have an emotional attachment to it.
Some business owners become stressed before the closing as they start to consider the personal implications of the sale of their business. They sometimes delay the sale or even back out entirely. This may be due to the anxiety they may feel at the thought of having to face major life changes after devoting so much time to their business.
Finding a New Focus
Most entrepreneurs are go-getters. They need something to do with their time, be it a hobby, a new job, a role in a charitable organization, or something that will give them a new sense of purpose.
After being business owners for many years, most of our clients are initially relieved to retire. The problem with this scenario is that many entrepreneurs do not know how to “do nothing” or simply relax. Many clients — the same ones who were excited at the idea of retiring — become stressed and overwhelmed once a buyer makes an offer on their business. Once their business is sold, many entrepreneurs find that what they once thought would be their dream of retirement turns out to be the very thing they resent.
Help the Seller Find a New Focus for Their Energy
Luckily, there are ways to help calm the seller’s nerves. What happens after they sell their business needs to be planned just as much as the sale itself. You would not sell your house without knowing where you will be moving. The same principle applies here: Why would you sell your business without having a detailed plan about what you are going to do next? Answering “I will be retired” is not enough. The seller needs to direct their energy toward a new passion.
Returning to Their Business
A year into retirement, and sometimes even less, the entrepreneur is looking for something else to do with their time. Many business owners even return with a desire to play a role in their former business. This is an ideal opportunity for you. Ask the seller what areas of the business they most enjoyed working on, then align their interests with the activities that provide the most value to you.
Play to Their Interests
Many of the seller’s interests can provide enormous value to the business, such as recruiting, sales, marketing, or establishing key alliances. These are often difficult positions to recruit for, but the previous owner may be talented in these areas and may be willing to take them on at a salary below market value. Sellers are sometimes willing to work these roles on a commission basis if the position is structured to meet their lifestyle.
Flexibility is Key
Most retirees desire flexibility, and if you can offer this to the seller, you may develop a win-win situation in which you retain experienced talent at less than market value and in which the seller retains a role that offers flexibility and pays them well. Structuring an arrangement like this can also assist in retaining key customers or employees. Key partners will feel more comfortable if they observe the seller’s ongoing participation in the business.
Emotional and Financial Needs
The seller’s emotional needs often are just as important as their financial needs. Keep this in mind during the transaction and be prepared if the seller experiences periods of last-minute anxiety. Addressing these needs will help ensure a smoother sale and garner more cooperation from the seller, both during the transition and after.