Conquering Your Emotions When You Sell Your Company
Unless you’ve already been on the journey, it’s impossible to understand the emotions an agency seller will experience during the sales process. Think about other major events in your life – raising children, selling your house, going through a major medical crisis, losing a family member or close friend, getting divorced -and the impact your actions have had on them and you’ll begin to understand what goes on in a seller’s mind.
It's almost unheard of to come out of a business sale without paying a high emotional price.
That’s what Jim Afinowich, a Phoenix based M&A advisor, says he sees on a regular basis. He adds, “Most owners have a strong personal connection to their company. It is not just the source of their income and wealth; it may also be a major source of their identity and purpose. If they built the business from scratch, they might liken that process to parenting – nurturing the company through sleepless nights, protecting it from threats, helping it recover from illness, constantly leading and nudging it in the right direction, and preparing it to survive without them. Regardless of their motivation in selling, they will likely revisit that motivation and second-guess their decision over and over, up until, and probably for a time following, the closing.”
“The stress experienced in buying or selling a company often causes abrupt behavioral changes,” Mr. Afinowich continued. “Normally calm people become volatile. Expressive people become stoic. Confident people become vulnerable and defensive. Meek people become bold (but awkwardly so). Normally accessible people go into hiding. People who normally keep you at or beyond arm’s length become clingy. And people who you think would sell their company to their worst enemy if he was the highest bidder will end up selling to the second-highest bidder – perhaps at a cost of hundreds of thousands of dollars – because they have decided that the top bidder is not their kind of people.”
All of this is not surprising, considering the stages of a sale process:
First, there’s the courtship, where the parties meet, develop some amount of chemistry and come to an initial agreement on price and terms.
Then, the infatuation and optimism give way to less of a connection, as the parties dig into the details of the deal.
Due diligence can lead to resentment, anger and suspicion with questions like, “Why does he want that?” or “Why doesn’t he see the value I see?”
While no amount of preparation can prevent a seller from waking up at 3:00 am on the morning of the closing, asking him or herself “Why am I doing this?”, there are definite steps you can take to manage your journey.
According to Erick Hamdan, CFO of Leder Holdings, the emotional aspects of selling your business are manageable if you are prepared. This type of transaction generally involves assembling a team of advisors that includes lawyers, accountants, business brokers, etc. Consider including a support system in this team as well. Find someone else who has gone through the process and talk to them about how they got through it. This can be anyone you trust who can guide you through the difficult transaction steps like due diligence. More importantly, it’s someone you can phone when you are having doubts about why you ever agreed to sell your business in the first place. These doubts will inevitably happen at some point, so having that experienced person to call on for support is invaluable until you finally come to terms with the whole process.
In addition to gathering this advisory team, it’s critical that you have a plan for “what’s next” after the sale. Without such a plan, it’s almost guaranteed that, within hours after closing the sale, you’ll start feeling lost. But having a plan will help as you walk through the emotions of selling.
Selling the company you built can be one of the most draining periods of your business career. Be prepared for the emotional roller coaster by gathering your team of trusted advisors and knowing what you’ll do with the next phase of your life.
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