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Exiting Your Business? Take This Advice from Fellow Entrepreneurs

  • 24 October 2017
  • Author: Alexander Carr
  • Number of views: 1814
Exiting Your Business? Take This Advice from Fellow Entrepreneurs

Whether you’ve owned your business for decades and are ready to retire or are looking to sell a growing new venture, exiting a business is tough. The experience can be fraught with many financial and emotional setbacks, even for those who thought they had masterfully choregraphed every single step. We asked some of our favorite entrepreneurs to share their experiences from past exits—what they wish they had known and what they could have handled better. We’re grateful for their candid advice and hope that it helps you plan your next chapter.

“Don’t try this at home!”

We spoke to an entrepreneur in the B2B space who sold his business two years ago to go “all in” on another venture. He wishes he would have ramped up the next business better before exiting. He also learned a valuable lesson about surrounding himself with a team of experts. "Don't try this at home! It is a complex process, and it takes a team of advisors to do it well,” he offers.

Prepare staff for a culture shift

Another entrepreneur whose small agency recently underwent an acquisition by a large consulting firm admits that more advanced notice to staff on the culture change would have benefitted everyone. He recommends possibly finding a culture consultant to prep staff for the change. In addition, he advises, “be sure to find deal lawyers and finance people you trust, and hire a consultant/investment banker to find the best deal.”

Look out for yourself but don’t take things personally

An IT consultant whose business was also acquired had this to share: “An acquisition will typically involve an earn-out for the owner. Be sure to understand the structure of that earn-out and what can change over the earn-out period. If you're not careful, you might end up with much less than you expected. The earn-out is the real cash you'll end up getting for your business, so understand it well before signing the closing documents.”

He adds that no amount of exit planning is too much.

“Your bookkeeping should be up-to-date and accurate, perhaps even audit yourself with a CPA to make sure your financials will hold up when scrutinized,” he suggests. “Get your business assets documented and corporate organization paperwork to provide the necessary information for asset purchase agreements. Finally, your business may be your pride and joy, but the buyer will be pointing out every flaw, mistake, and loss they discover during due diligence. Don't take it personally. Be honest and explain the discoveries; it is part of the valuation process and not a reflection of you as a person.”

Find a mentor or coach

A management consultant who sold her business learned she may not have fully prepared herself mentally for what’s next. “I thought I was ready to retire, but I was quickly bored from the lack of mental stimulation,” she told us. “I also did not realize how much of my personal identity was related to the business.”

She adds, “Of course, you must have a solid business exit plan and an experienced accountant and business lawyer. That is imperative. But beyond that, find a mentor, coach, or friend who can help you plan for and implement a personal transition plan. Selling your business is a huge personal transition, as well.”

Prepare early

Early preparation is key. Take a look at our article “It Can Take 10 Years to Retire Right, and Here’s Why” to learn about the process of exit planning and why it can be an ongoing endeavor.  And, if you have additional questions, please feel free to contact us.

Image Copyright: mavoimage / 123RF Stock Photo

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