By Bruce Pockrandt, CBI
Managing Broker, Truforte Business Group
Business owners can spend years preparing their companies for sale and almost no time preparing themselves for what happens afterward.
They work on valuation.
They organize financial records.
They meet buyers.
They negotiate the purchase agreement.
They survive due diligence.
They reach closing.
Then Monday morning arrives.
And for the first time in 20 or 30 years, nobody needs them at the business.
That transition deserves planning too.
For many entrepreneurs, the company becomes part of their identity.
When someone asks, “What do you do?” the answer has been connected to the business for decades.
You may have spent more time with employees than with some members of your family.
Customers became friends.
Vendors became relationships.
Your schedule, social network and sense of accomplishment may all be connected to the company.
Selling changes more than your bank account.
Owners spend plenty of time thinking about what they’re retiring from.
Stress.
Employees.
Long hours.
Customer problems.
Payroll.
Regulations.
But what are you retiring to?
Travel?
Family?
Golf?
Consulting?
Investing?
Another company?
Mentoring entrepreneurs?
Community involvement?
A few months of relaxation can be wonderful.
But retirement can last decades.
Have something meaningful waiting for you.
Business value and retirement needs are two different things.
Your business is worth what the market supports.
Your retirement requires whatever your financial plan requires.
Those numbers may or may not match.
That is why financial planning should occur before you sell.
Work with qualified financial and tax advisors to understand your needs, potential transaction structure and the implications of a sale.
Don’t wait until closing to ask whether the net proceeds are enough to support the life you want afterward.
A $3 million purchase price does not necessarily mean $3 million lands in your personal investment account.
There may be taxes, debt repayment, transaction costs, professional fees, working-capital adjustments, seller financing or other considerations.
The structure of the transaction matters.
Your CPA, tax advisor, attorney and financial advisor can help you understand potential outcomes before you sign an agreement.
Some owners think they want to retire immediately.
Then they discover they aren’t ready to leave.
Others agree to remain involved after closing and quickly realize they wanted a clean break.
Think about this before negotiating the sale.
Would you enjoy consulting for the buyer?
Would you rather be completely finished?
Would you consider staying six months?
Would you invest alongside the buyer?
There is no universal right answer.
But knowing what you want helps structure a transaction that fits your goals.
This can be difficult.
The new owner may change the logo.
Replace equipment.
Change vendors.
Alter employee roles.
Change prices.
Run the company differently.
You may disagree.
But once you sell the business, it is no longer yours.
If preserving certain aspects of your legacy is extremely important, discuss those priorities during the sale process—but recognize that a buyer ultimately expects to own and operate the company.
Many sellers care deeply about what happens to employees after the sale.
That’s understandable.
Some employees may have been with you for decades.
If employee continuity matters to you, make it part of your thinking when evaluating buyers and transaction structures.
Just be careful about promising outcomes you cannot control after ownership transfers.
Selling your business doesn’t erase everything you’ve learned.
You may have decades of knowledge about leadership, customers, operations, sales and entrepreneurship.
Some former owners find satisfaction mentoring younger entrepreneurs, serving on boards, investing in companies, consulting or becoming involved in community organizations.
Others want nothing to do with business again.
Both choices can be valid.
The important thing is to make the choice intentionally.
Exit planning should include two parallel plans:
A plan for the business.
And:
A plan for the owner.
The business plan asks:
What is the company worth?
How do we prepare it?
Who might buy it?
How do we get through due diligence and closing?
The personal plan asks:
What do I want my life to look like afterward?
How much money do I need?
Where will I live?
What will I do?
How involved do I want to remain?
What gives me purpose when I no longer own the company?
Both plans matter.
A successful exit isn’t simply reaching the closing table.
It is reaching the closing table with a transaction that supports what you want to do next.
That’s why the best time to begin thinking about life after the sale isn’t after you receive the wire transfer.
It’s before you ever put the business on the market.
Related reading: How to Sell a Business in Florida: A Step-by-Step Guide and the exit planning checklist.
Ideally, well before the sale. Personal, financial and tax planning can influence your timing and the type of transaction you ultimately prefer.
Many owners benefit from consulting qualified financial, tax and legal professionals before a transaction so they understand their personal objectives and potential consequences.
Sometimes. Consulting, employment and transition arrangements can be negotiated depending on the buyer, seller and transaction.
That is one reason to begin planning early. Selling the business and retiring do not necessarily have to be treated as the same decision.
Understand both sides of the equation: what your business may be worth and what you personally need from a future sale.
Bruce Pockrandt, CBI, is Managing Broker of Truforte Business Group and a Florida business broker helping owners understand business value, prepare for an exit and confidentially sell privately held businesses throughout Florida.
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This concludes Bruce’s Guide to Selling a Florida Business.
If you’re considering selling now or in the future, a good place to begin is understanding where you stand today.
To learn more about the value of your business, contact Truforte Business Group. Visit TruforteBusinessGroup.com or call 239-284-1317.