The sale of your company is not an inevitable necessity. While most of your net wealth is probably tied up in the business, you do have other options. For example, you could hand the company over to a family member, create an ESOP, hire a senior executive to run the business for you after you retire, take the company public, and more.
However, as Brent Bashore wrote In The Messy Marketplace, “at some point, in some way, each business is transformed – years pass, people age, markets change. This often carries an unfortunate amount of stress, anxiety and frustration. Most of the time, transitioning is a once-in-a-lifetime occurrence and the traditional paths are unnecessarily opaque….Ultimately, we all must sell, pass along or shut down our companies. The only alternative is to roll the dice and do nothing…. All too often, decisions left [unmade will cause your family] to clean up the mess. The Company will be rudderless and and the best customers and employees will jump ship…Decisions left to the next generation create infighting amongst heirs over who gets what, and when.” (The Messy Marketplace, by Brent Bashore)
Key Questions to Consider:
Goal alignment – for yourself and your company
As a first step in deciding what exit path to take, you will need to better understand your motivations for selling. A self assessment may help clarify the primary goal. And a clearer understanding of the goal will help you to determine if selling is the correct strategy to achieve the goal (or if hiring an Operator, for example, might better address the goal).
The above list of questions is merely a starting point. Conduct an assessment of your business’ (and your) readiness to sell. There are a number of assessment tools, some of which are free, available to business executives. However, many are geared toward describing your leadership style, personality traits, or general motivators. While all assessments can be useful, in this particular case, you are looking for insights to help you envision your role, your purpose, your focal areas going forward – after hiring an executive to run the company, or after selling the business, or after partnering with an investor, for example.
“There are seven root motivations for transitioning a company: personality/skills; exhaustion; freedom; health; obligations; risk; legacy. Notice, I didn’t mention money. That’s because you’ll almost always do better financially, assuming the Company continues to perform, by not selling your company….Except on very rare occasions, your lifetime earnings potential will decrease as the result of a sale, because investments you make with sale proceeds will likely never measure up to the fruits of running your own company.” (The Messy Marketplace, by Brent Beshore)
Let’s take these motivations one at a time: