How to Avoid Seller’s Remorse: 3 Tips for Letting go of Your Business

Entrepreneurs hoping to sell their business may do so for a variety of reasons. Maybe they are looking for support with the company they founded. Or, a merger might offer opportunities for growth that would otherwise be impossible. Perhaps a new adventure awaits, but a founder feels they must first finish what they started or otherwise leave their legacy in good hands so that it can continue to thrive. Whatever the reason, every year at least 30,000* business owners in the US bring their company to market in hopes of a successful sale.

Of course, simply putting your business out there doesn’t ensure a desirable outcome. The stark reality is that only about 30 percent of companies vying for a buyer are ever actually acquired. And of those, a whopping 75 percent of founders deeply regret their choice to sell within the first year following the transaction.

When I took my company, Killer Visual Strategies, to market in 2018, I was determined to buck these trends. Not only did I want to fall into that minority of businesses that make it through the acquisition process, but I wanted to avoid post-transaction seller’s remorse like the plague. Today, nearly four years following my agency’s acquisition by Material, I can confidently say that I achieved my goals–and then some. If you want to do the same, here are three tips to help you beat the odds when selling your company.

1. Before going to market, define your preferred outcomes.

On average, 47 percent of a company’s key employees will leave shortly after a major transaction. To mitigate this risk–and avoid the pain of losing the very people who helped you get to a sale in the first place–invite the team to assist in identifying and driving a preferred outcome.

Six months before taking Killer to market, my team and I began discussing our preferred outcomes and the impact a transaction could have on our business. This open dialogue helped us set clear expectations while identifying potential concerns and fears we then discussed as a group.

We considered things like:

  • The type of partner we wanted to attract: Did we want to partner with a complementary business, a competitor, or maybe an investor looking to grow our brand?
  • The type of people we wanted to work with: Did we want to expand our team through a merger, work alongside people more experienced (or experienced in other areas), or remain autonomous with little impact on our people? And what about shared values ​​and culture? How important would that be to us?
  • The type of deal structure we would accept: Did we want an earn-out for shareholders or a complete buyout? Did we want entirely new leadership or background guidance for current leaders?
  • The future of our brand post-acquisition: Did we want to maintain and grow our brand or were we willing to give it up for something larger? Did we want to maintain our area of ​​focus or expand?

Committing to just one preferred outcome that would make it extremely hard to find the right partner, so our team identified several potential scenarios we would be comfortable with to start. We consider an investor-only approach, an outright acquisition, a complete overhaul of our brand, and so much more. This encouraged the team to flex their expectations–a necessity when so much was still unknown–and see how various paths could twist and turn their way to multiple acceptable results.

For example, we all hope that this journey would culminate with more challenging projects, the opportunity to bring new services and expertise to our clients, and a larger team to allow us to meet the growing demand our company was facing. While these outcomes were achieved, they didn’t happen overnight. But because we had multiple all-team reality checks leading up to the transaction, the team was far more prepared for the hard work of transition that any company endures post-acquisition.

2. Ensure all parties align on values.

While it was important to remain flexible about potential outcomes, throughout every scenario we discussed as a team there was one requirement we refused to yield on: we would only entertain potential partners who respected and shared our core company values. This was our non-negotiable. Even the best of intentions cannot guarantee a perfect outcome, but when multiple parties align on a set of shared values, they are far more likely to survive the unavoidable obstacles of any merger or acquisition.

When Killer went to market in September 2018, we had dozens of interested parties within weeks. While exciting, this also meant that I would need to turn my attention from the day-to-day operations of my company and toward nonstop pitch meetings of seemingly exhausting scrutiny. A distraction of this magnitude can be extremely risky for a small business owner but this non-negotiable made it far easier to navigate than expected.

While most business owners spend months hoping to appeal to potential buyers, I only weeks spent. Guided by our values, I was able to easily discern long-term compatibility with a potential partner and narrow the field quickly. While a lot of interested parties shared similar preferred outcomes, it was our shared values ​​that made one organization stand out from the rest.

At the time, Material was still in its infancy. It was a vision of an agency collective that would provide an end-to-end suite of services for clients around the globe. Their vision was audacious, their leadership was highly impressive, and their values ​​were in complete alignment with ours. We became the fifth agency acquired into what would eventually grow into a family of nearly a dozen world-class firms, united as one.

3. Identify and Stick to Your Motivators

If your only motivation for selling your company is money, then you’ll likely end up among the 75 percent of unhappy entrepreneurs, post-sale. This doesn’t mean you shouldn’t care about realizing the value of your years-long (if not decades-long) investment in your business. But a motivation like this will lose steam quickly post-transaction, so it can’t be your only driving force. Transitioning from being your boss to reporting to a parent company can be a hugely humbling and sometimes challenging experience. If money is your only motivator, you will likely not realize the benefits of this experience and may instead choose to walk away entirely.

When I brought my company to market, I was determined to provide my team with more career opportunities than were possible in a small, 30-person company. I was committed to providing our clients with services beyond our expertise, ensuring they wouldn’t need to partner with multiple agencies for singular goals. With the creation of Material, these motivators were fully realized.

But I believe the entrepreneurs that remain happy long after an acquisition share one motivating factor that keeps them excited and committed for the long run: to learn. After being my boss for nearly a decade, I knew I would benefit from the guidance of founders who had built more successful companies than my own. I knew I would grow personally and professionally working alongside industry experts to build something far greater than any of us could have done by ourselves. I’ve learned more post-acquisition than I ever did as my boss, and could not imagine who I would be today had it not been for this experience.

For Material-Level Results, Stack The Deck in Your Favor

I often tell people that I got really lucky when Killer became part of Material, and that’s true. But luck was just the cherry on top of a carefully crafted sundae. In reality, I knew the odds were not in my favor, so I found other ways to stack the deck. If you’re a business owner hoping to sell your company without regret, these three tips will help sway luck in your direction.

*This number is calculated based on findings that 10,000 businesses are sold each year, but only 30 percent of businesses put up for sale each year are acquired.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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