Guest Post
Katy Mitchell, Founder & CEO of KSM Leadership Consulting
You have made the decision it is time to sell your business. It’s a mixed bag of emotions as you embark on the challenging yet rewarding (fingers crossed!) experience of selling your business.
Most business owners work closely with accountants, financial advisors, attorneys, and brokers to prepare for a potential sale. What often is overlooked is how emotions and relationship breakdowns can derail a sale.
Here are some challenges to consider and strategies for mitigating the negative impact.
Wavering Commitment
One of my favorite sayings is “pain pushes until the vision pulls.” Do you want to be motivated by pain (e.g. burnout, family conflict, partner conflict)? Or do you want to be motivated by excitement about the future?
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This includes a vision for what life after the sale looks like for you and your family. This may seem like a no-brainer, but sellers often put significant energy into the do-list to get through the transaction without giving much thought to what the post-transaction life looks like.
When you set a clear vision for what you want after the sale and can imagine an identity other than a business owner, you have a north star to guide you through the rocks.
Vision keeps people motivated and optimistic, even when it is hard to do so because of today’s challenges.
Unspoken Expectations
The business may be your baby, but there are other people beyond your employees who also have an emotional connection to the business.
If the idea of taking over the family business was ever floated to your kids even in passing, that seed may be blossoming more than you realize.
For example, let’s take the case of Trent. He pursued a business degree and is now five years into working at a Fortune 100 company. He’s having a lot of fun and enjoying his work. He talks to his parents about the wonderful training programs and career options. However, in his mind he is still keeping the door open to taking over family business. In his parents’ minds, he would be silly to leave such a great opportunity. The parents start planning for an outside sale. By the time the parents discuss their plans to sell, they are well on their way to putting their plan into action. Trent is shocked and hurt.
“Act like an owner!” “But I’m not an owner!” This is a common exchange I hear when the next generation person is working in the business and starting to ask mom or dad a timeline for transition.
It’s usually code for the perception of hours worked or even time in the office. The parents are torn between selling the business and succession, knowing that their retirement depends on what happens with the business.
The next generation is starting to think succession isn’t going to ever happen so commitment is fading. The family attempts to have the conversation, but the conversations always get heated, feelings get hurt, and nothing gets decided. Meanwhile time keeps marching forward.
Both of these challenges require much more communication. I often advise communicating early and often. Test your own assumptions. Have a frank and kind conversation to gather other people’s hopes, concerns, and expectations.
Partner Dynamics
The more people there are in the mix, the trickier a sale can become.
I have seen situations where partners are very close to signing off on a deal to sell when one of them gets cold feet. Rather than talking through the partner’s concerns, the deal fell through and everyone stopped talking to each other. The excitement of a sale has now turned into a potential lawsuit.
Again, communicate frequently throughout the process. Set up regular touchpoints with your partners to make sure everyone stays on the same page. Make it safe to discuss any points of concern openly.
How to Avoid Psychological Roadblocks
As you consider putting your business on the market consider these steps.
Create a compelling and clear vision for what life after the sale looks like for you and your family. Make it fun! You have worked hard creating your business, now you have an opportunity to pursue a new phase of meaning in your life.
Avoid unnecessary family tension by talking about unspoken assumptions. If you are unsure you should sell or transition to the next generation, put all perspectives and expectations on the table.
Communicate frequently and transparently with your partners. One difficult conversation is always better than never speaking to your partners again or ending up in a lawsuit.
An outside facilitator can help all parties express their needs and goals in a productive way while also maintaining healthy relationships. If you are considering selling and know you have some difficult conversations ahead of you, we can help.
We don’t want your business to fail. Call me with any questions this post may have prompted or for a personal introduction to Katy. (561) 543-2323
As part of the LaManna Consulting Group team, Katy Mitchell helps business owners address succession issues and the interpersonal dynamics of a business transition. Katy is the founder of KSM Leadership Consulting.