October 26th, 2011
The successful entrepreneur built his company from the ground up. In many cases, he guided it through stormy economic times and took decisive action when necessary. Thirty years later, his modest lifestyle business has evolved into a multi-million dollar operation with a significant payroll.
Now there’s an opportunity for a sale and a profitable exit that will allow him to achieve his personal financial goals – but he’s struggling to let go.
Mergers & Acquisitions are win-win opportunities for the companies involved. In some cases, the buyer gets new capabilities and infrastructure with lower risk and lower cost than trying to develop them in-house. The seller tries to maximize shareholder value, particularly when selling to a strategic industry buyer.
However, business owners can be so attached to their companies that they hesitate when opportunity knocks. The company is their child – how can they just walk away, even if a great opportunity presents itself?
When your identity seems so inseparable from the company, selling or taking on a partner can be a very difficult decision. Stumbling blocks can be the business terms of the deal and the time needed for the owner to adjust to losing control. In order to prepare for a sale of the business, owners can:
- Start thinking of an exit strategy early on. Succession planning (and establishing personal goals once you are no longer involved in the business) is an essential part of overall business planning.
- Get your company ready. Start reducing the reliance of the business on the owner. A solid business with a management team and established processes and systems is generally worth more than a business which is highly reliant on the personal goodwill of the owner.
- Set new goals to achieve. Exiting from your company from a merger or acquisition isn’t the end. It’s a chance for a new beginning, whether that means starting a new company, shifting into a consultancy role or just playing a whole lot more golf.