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Are You Prepared to Sell Your Business?

By Generational Equity

Prepared to Sell a Business

So, you have reached a point in your life where you realize it is time to move on from the business you have nurtured to success. You have also come to the painful realization that for a variety of reasons, the kids and your key employees are not going to be able to take over your business.

Finding a third party to acquire your business is the logical alternative to ensure you receive the financial ROI you deserve and that the legacy of your company will continue.

But are you really ready to exit?

We spend a great deal of time in these articles discussing how to create a “buyer ready” business. In many cases, that is the easiest part. You simply take steps to ensure that the risks associated with buying your company are reduced so that buyers are more comfortable investing. The less risk, the more they will pay and the better the deal structure when you exit (all things being equal).

The more difficult part of this scenario is preparing yourself to sell your business, and come to terms with the knowledge that you will no longer be responsible for the day-to-day running of your company.

How do you ensure that you are personally buyer ready?

More often than not, getting a deal across the goal line requires our dealmakers understand the psychology of their clients (and client’s families and key advisors) just as much as they know the business. A seasoned dealmaker once told me that his primary role was to act as a marriage and family counselor for the clients he worked for!

Having worked with entrepreneurs for decades now, we recognize from our vast experience that exiting a family-owned business can be one of the most difficult and emotional processes anyone can ever go through. In fact, many deals get to the 11th hour, in touching distance of the close, and the deal falls apart because the seller gets cold feet for a myriad of reasons.

Here are some reasons that we have heard:

  • “I’m just not ready to exit.”
  • “What will I do with the rest of my life?”
  • “I don’t like the personality of the buyer.”
  • “I will miss my employees.”
  • “I have no hobbies or interests outside of the business.”
  • “I am worried about the legacy I am leaving behind.”
  • “No one can run the business as well as I do.”

We’ve heard dozens of other reasons, all of which have nothing to do with the business or the deal structure itself, but everything to do with owners not being psychologically prepared to sell their businesses.

Understanding Business Owner Psychology

Recently Dr. Allie Taylor, the cofounder of advisory firm Orange Kiwi, was interviewed by Axial about her work with entrepreneurs to get them psychologically prepared to exit.

Dr. Taylor is a renowned expert in owner psychology, achieving a PhD in business psychology and devoting years of experience to researching the topic. This is how she described the challenge of working with business owners to prepare them for an exit event when she was asked: Do you get pushback from owners who are skeptical of your psychological approach?

A typical owner who is going to have a negative reaction is one whose identity is highly or very highly fused with his business and/or one who is not open to change. Even if they say they want to achieve a successful transition, below the surface they are experiencing a psychological threat. They will have to wait for a trigger event. In that case, we’ll be the ambulance at the bottom of the hill; we’re not going to chase them.

The Two Kinds of Business Owners

As we have said before, there are two kinds of business owners:

  • Those that PLAN to sell
  • Those that HAVE to sell

We often look at these two options through the lens of the business planning (getting the financials in order, etc.). I would suggest that the reason our deal teams have been so successful over the years is that they also look at these two options in the context of the psychology of the typical business owner.

So, ask yourself: Are you psychologically prepared to sell your company?

It is wise to address this question early in your exit journey, because the worst thing you can do is go through 90 days of due diligence with a buyer and then pull out of the deal because you are not personally prepared. We work closely with our clients to make sure that they are ready, and that the family and key employees are ready as well.

The great news is that quite often the owner feels a huge sense of relief after the deal closes, is financially liquid, and now has time to spend on enjoyment. Have a listen to a few of our clients:

To learn more about how we can help both you and your business become buyer ready, call us at 972-232-1121 or visit our website, provide us with your contact info, and we will be in touch. And if you want to read the entire informative Axial interview with Dr. Taylor, you can do so here:

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2021 Generational Equity, LLC. All Rights Reserved.

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Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Robert Evans, President and CEO of Mealtracker Dietary Software
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
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Jay Dinnison, Owner of Sharpe Mixers
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!
Tom Currier, Former President & CEO, Rackmount Solutions
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels