Selling Your Business: The Financial Stakes of Getting the Handoff Right

About the Episode

The transition after selling your business is one of the biggest risks a buyer takes on, and that risk shows up in the price you are offered and in any earnout or seller note you still depend on. This episode breaks down how private equity buyers handle the months after closing, from telling employees to replacing the founder as leader. You will discover how to agree on your role and timeline with a buyer, why long overlaps with a new CEO tend to fail, and which relationships to hand off before you sell.

What You’ll Learn

• Agree on your role and timeline up front: Tell buyers from the first meeting whether you plan to leave at closing or stay for years, and choose one whose plan matches yours. Buyers back away from owners they do not trust or who seem ready to walk away the next day.
• Hand off relationships before you sell: Move customer and supplier relationships, and the roles you fill yourself, to other people before going to market. If the buyer has to do that work after closing, it will pay less for the business.
• Keep the overlap with your successor short: A three- to six-month overlap with a new president usually works better than a long one. Two strong leaders in one company tend to butt heads, and the buyer will back the new team.
• Help choose the person who replaces you: Ask to take part in interviews for the new leader, because you know the culture better than the buyer does on day one. By the guest’s estimate, only a little over half of replacement leaders succeed.
• Expect the first year to dip: Many acquired companies have a weaker first year while the buyer learns the business and invests in it. Losing a key employee, customer, or supplier during the handover can take a long time to recover from.

Topics Covered

Want More? Related Resources:

• The M&A Training & Transition Period
• Informing & Retaining Employees When Selling a Business
• What to Expect When Selling Your Business to an Independent Sponsor
• How to Tell Your Employees You’re Selling
• Sequoya Borgman on LinkedIn

This episode provides general information only and does not constitute legal, tax, accounting, or other professional advice. The guest’s views are his own and do not necessarily reflect the views of Morgan & Westfield.

Meet Our Guest

Sequoya Borgman

Founder and CEO, Borgman Capital

Sequoya founded Borgman Capital in 2017 to acquire majority interests in established, closely held lower-middle-market companies, many of them founder- or family-led. He has more than two decades of M&A experience and has been involved in hundreds of mergers, acquisitions, restructurings, and financing transactions. Before Borgman Capital, he was a Partner and practice leader at RSM US LLP and a Managing Director at KPMG LLP.

Location: Milwaukee, WI

LinkedIn: https://www.linkedin.com/in/sequoya-borgman-8a6057a/