St. Louis Business Journal
Selling your company: Get your money and go

By Anna Navarro

May 2003 - Owners who sell their businesses are usually best off getting their money in cash and leaving the company they started within a few months of the sale. If they stay longer emotional rip tides that accompany the transaction can lead to headaches (and heartaches) for the seller, the buyer and employees alike.

ON THE SELLERS SIDE

It's a rare owner who doesn't struggle with what he or she will do after the sale of a company. There may be financial advantages to selling, and owners may welcome a reprieve from demands that are simultaneously stressful and boring after years of repetition. But the sense of purpose and collegiality that running a company provides are hard to replace. So often owners welcome some on-going involvement in the business.

ON THE BUYERS SIDE

Most new owners need to reshape the way an acquired company is run. But they also often see the original owner's knowledge of the business as crucial to the future success of the enterprise, and attempt to keep the seller involved in managing the company.

Caught in these crosscurrents, sellers and buyers are bound to clash eventually. Original owners may welcome some major changes (like upgrades to an information system). But they will usually find cultural changes very painful, because the culture of the organization they built inevitably reflects their values and way of operating in the world.

These conflicts within and between the buyers and the sellers often manifest as a battle for the loyalty of employees, who are torn between a long-standing commitment to the original owner, and a desire to please the new owner.

Everyone loses in this situation. Sellers feel tricked and abandoned. New owners lose valuable employees and productivity. Employees are faced with choosing sides and sometimes losing their jobs or influence in the organization.

A much better solution for all parties is the approach that Eric took. We started working together about two years before he actually sold his company, when he was just starting to think about selling.

His initial plan was to try to stay on and help manage the company after it was sold. By sharing responsibility with new owners he hoped to have more time off. But as we worked through various scenarios of how that would play out, he began to realize the downsides of that approach.

We then shifted our efforts to the hard work of deciding what he would do instead. After analyzing what he wanted in his new work situation (including a lot more free time!) we came up with a variety of options. He systematically investigated them and eventually got clear on the direction he wanted to pursue. Then he put the idea on hold and focused on finding a buyer and negotiating the sale, a very consuming task

Predictably, the new owners wanted Eric to have a hand in running the business. He countered with an offer to stay for a few months to transition the company to new management, and to be "on call" for a fee for a year to consult on any problems or issues that emerged. After some discussion, the new owners realized this would provide a solid bridge to a new management team, which is what they really needed.

Eric used the year when he was "on call" to organize his personal affairs, including investing the capital from the sale, and laying the groundwork for his new venture. Then he took a much-deserved three-month vacation.

When he came back he was ready to launch his new endeavor. Because the idea had been in the "incubation" stage for quite a while, he'd had the opportunity to refine it. It got off the ground with only a few minor bumps.

Though it was emotionally hard for Eric to do another start-up, and he missed the activity of an up and running business enterprise, reports from employees of his former company described changes that were taking place that really distressed him. If he had stayed, he would have had to fight them, or fight with himself to accept them.

Five years later, the company Eric sold rose to levels he would have never imagined. A person he hired at an entry level many years prior was now at the helm. And his own, smaller, simpler enterprise was thriving.

Bottom line: Sellers, like parents, need to know when to let go and start their lives anew. Buyers, like grown children, need to learn to operate on their own.

Anna Navarro is the founder of Work Transitions, a nationwide career consulting firm that trains independent career strategists and consults with individual clients.

This column was originally published by the St. Louis Business Journal. The actual title of the column and date in which it appeared in the Business Journal may be slightly different from what appears on WorkTransitions.com.