When is the Right Time to Sell?

In the last few weeks I’ve had several conversations with owners about selling their companies. In one case a professional firm with whom I’ve worked for the last 4 years completed a merger with a large national company. That was a “Boomer Bust” transaction, driven by an ageing partner group and a lack of willing successors in the next generation.

In another, a relatively young client received an unsolicited offer for the company. He wasn’t planning to sell for at least another ten years or so, but it’s a very interesting offer. Should he sell now for less than he eventually hoped, but for what is still a very large sum?  (Say- enough to start your own foundation.) What is the time value of having the money now, and ten years more to go in a new direction?

In the third, the owner received an offer to consolidate with an entity that is over a thousand times his size. The purchase of his company may be part of their consolidation strategy, or it might just be the equivalent of a signing bonus to bring him onto the management team. It isn’t quite enough money to retire on, or at least not in the lifestyle he currently enjoys.

In the fourth, the owner has quickly built a business that is both lucrative and very attractive to suitors. Should he put it on the market now, and begin something else at a young age with enviable financial security? Or should he grow this business in new directions, and keep all his eggs in this one basket?

In each case save the first, the issues are similar. The owner is far from retirement age. (They range from the early thirties to early fifties.) The money available isn’t theoretical it is either a concrete offer, or a realistic estimate of value in an active acquisition market. The proceeds would be enough to guarantee financial security, but not enough to permit unlimited dreams and ambitions. In the words of Bill Gates, it isn’t “escape velocity” wealth.

Perhaps most importantly, none of the owners are the slightest bit interested in traditional retirement. They all enjoy their industries, and want to keep working. All three are in excellent health, and have young families whose financial security is a high priority.

In my book, “11 Things You Absolutely Need to Know about Selling Your Business,” I discuss the importance of knowing what comes next. in Bob Buford’s book, “Half Time” he discusses how a middle-aged executive who has reached financial security can approach the second half of his or her life, the part where they want to give back to the community.

But these owners aren’t middle-aged. They want to keep building. They are still excited by the chase of business. They still seek the adrenalin rush of the big win. They look in the mirror and, with the insecurity of every entrepreneur, ask themselves the most telling questions.

“Am I good, or was I just lucky? Could I do it again? Could I succeed with something else I don’t know, or in an industry where I don’t have experience? If I give up my company, am I giving up who I am?”

We are the hunters, Hunters don’t succeed by looking back at what is behind them. They are genetically hard-wired to look forward at what is next, where the objective is. When you start thinking about selling the business, it isn’t always because you are tired, or bored, or looking to do something else. Sometimes, a business decision is just a business decision.

But for an entrepreneur it is never “just” a business decision. It is about life, and self-image, and fear, and desire, and family, and ego, and security, and insecurity. It’s about looking where we never look- back over our shoulder. And it’s about looking further ahead than the next monthly statement or sales cycle. It’s about going where you may not set the rules. In fact, you may not even know the rules.

And the answer, and the reasons for the answer, are different for each person. Just as they will be for these three.