Euphoria, exhilaration, and relief are probably the emotions that most business owners expect to feel after selling their businesses. After all, this is the day they have long been waiting for; they have likely spent years anticipating the way life will be once they have sold their company and moved on.
One emotion that owners probably don’t expect to feel is remorse. What could they possibly regret? Here are some of the things that we hear frequently from owners: “I thought I would get a better price after all my years of hard work”; “I had no idea I would pay so much in taxes and fees and net so little”; or “I never thought they would radically change the company…but they did.” After spending so much time toiling in your business, it’s very easy to have regrets once you are no longer devoting so much time and energy to it. No one warns you when you start a business to make sure lead a balanced life and keep your own identity in perspective.
Owners who are looking forward to a business transition may not realize that their identity and that of the business may now actually be one and the same, which can lead to seller’s remorse. If you’re not prepared for the transition, it could lead to a feeling of emptiness and loss.
There are steps owners can take to avoid these regrets and disappointments:
- Devote some serious time to figuring out what you want to do after you sell. You have most likely spent all of your time, money, and energy on your business, and it will take time to separate your identity from your role in the business.
- Gradually spend more time away to gain the time and space you need to identify your goals and objectives and envision yourself without your business.
- Calculate your Wealth Gap or how much money you will need to net from this transition in order to achieve your financial goals.
- Understand your transition options and the pros and cons of each before making a decision.
- Be proactive; don’t procrastinate.
- Allow sufficient time, we recommend 3 to 5 years, to plan for the financial and personal aspects of this major transition.
A recent article in The Business Journals, “How a Baby Boomer Can Gain Closure After Selling a Business” also suggests that writing a letter to the new owner, providing historical context and your hopes for the future of the business, can help provide a sense of a closure for the owner who is transitioning out of a business. Here are five tips the article outlines for writing a letter to the new owner:
- Explain the reason for the letter (or video) — feelings, reflections, worries — and why it will bring closure.
- Offer the big picture — let the new owner understand the importance of the business from the founder’s viewpoint.
- Encourage the new owner in specific ways.
- Provide insights into what has made the business successful, and advice on any key concerns, in a positive way.
- Be as personal and transparent as possible. Inject values and character.
Most of the disappointments that owners feel after selling their business can be avoided by developing a comprehensive and custom plan with the assistance of seasoned advisors. The next phase of life can be what owners envision - a life filled with excitement and the fulfillment of lifelong dreams and goals. The best years of your life need not be spent wishing you could have achieved a different outcome with the sale of your company. Sadly, many owners will unnecessarily experience disappointment and remorse. The choice is ultimately yours. Education, planning, and communication will enable you to achieve your optimum transition and prevent “seller’s remorse.”