What Do I Do Once I Sell My Business?

By Generational Equity

09/21/2015

The simple answer to that question is this: whatever you want! Pull out your bucket list, re-prioritize it, and now that you are liquid, having monetized your biggest asset, go and enjoy life!

Unfortunately, as with most life changing situations, the answer to the question What do I do once I sell my business? is never that simple. But fundamentally the analysis you need to do about the direction you personally want to head post transaction is probably one of the most important processes you will ever go through. When we meet with clients at our exit planning symposiums, one of the first items we discuss is motivation – it is very important for us to determine where on the decision-making spectrum the business owner is.

For many, they are at the initial step in exit planning and are attending our seminar to begin learning about how and when to exit. For others, they are much further along, having made the decision to exit sooner rather than later.

However, under either scenario we highly recommend that business owners take stock of their desires and motivations post transaction, and create a plan for the next phase in their lives.

Two types of transactions are typical:

• 100% sale where the current owner(s) exits at some point, usually 1-3 years after a transition to new owners.
• A partial sale where an investor, usually an equity firm, acquires 51% (or more) of the company and creates a new entity, and existing owners are typically retained to help the new firm reach its growth targets.

Typically the second transaction described above is for younger owners who are interested in staying not only to participate as a minority owner in any future liquidity events but also to take part in the exciting growth that is now possible given deeper pockets. With either transaction format (and all the possible permutations under each), understanding what you want to do in the future with your life is vital.

Hobbies or Not?

Most business owners have been so busy operating their companies for the last several decades that they have neglected themselves, and many have no hobbies or outside interests, save their families, to keep them busy post acquisition. We often hear back from our clients once the deal has closed and they tell us that they are driving the spouse crazy because for the first time in 30 years, the ex-owner is around far too much!

You want to avoid that scenario.

So here are some ideas we have gleaned over the decades of working with business owners to help you begin the process of thinking about the next phase:

• Take inventory of what you like to do – think about all the things you would like to have done over the years but couldn’t because the business occupied your time.
• Have frank and honest discussions with your spouse and loved ones about what they believe you should do post sale – the vision they have for you could be enlightening.
• Do not delay the start of the exit planning process if you are unsure what you want to do post sale.

This last point is probably the most important to consider. As you go through your exit process (which can take anywhere from 9-15 months), your motivation most likely will change. This is natural. Quite often our clients begin working with us with one set of expectations about their post sale lives only to have that completely change as they spend time working on their documentation, talking with buyers, and learning more about how the M&A process works.

Again, what you choose to do after we sell your company is completely up to you. We have some clients who after selling their businesses actually come to us years later looking for acquisition targets because they miss running the company.

The key first step that we recommend to every business owner is the attendance at a Generational Equity M&A seminar. If you are unsure of your motivation, or if you are sure and simply want to learn the steps involved in selling all or part of your business, the meeting will help you crystallize your plans.

The good news is that these are complimentary and require no obligation on your part whatsoever. All you have to do is invest a few hours of your time and gain a wealth of knowledge that you can use to begin thinking about the key question: What do I want to do after I sell my company?

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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