Letting Go of the Bush
Many sellers find the process of letting go of their company in the transition to new ownership much harder to do than they thought it would be. Makes sense, right? When you are the person who started the company decades ago with just a lawnmower, a truck and a vision (and from reading company websites, that’s the way most started!) you had to do everything from sales to design, operations to invoicing, mowing and sweeping!
You’ve had to be all things to your company and even though it grew and evolved from $1mil to $10 mil in revenue, you probably still have a very strong hand on some things in the company. This is true even if you are an enlightened owner who has built a strong leadership team.
There are always some things that “only you can do” that have great influence and impact on the company. You, as the owner, can be a positive or a negative for the future of the company you just sold. You can also put yourself in a position to suffer from not having the control and influence over things that you think are critically important but are not your worries any longer. What kind of situations might these be? Here are a couple of real-life examples:
Example 1)
Tom, the founder of a $4 million revenue landscaping business, was still the most important influence on sales in his company. He had two Account Managers who were responsible for sales but kept his most influential sales contacts close through his golf outings and charitable work. He didn’t host events as a company with employees involved and he didn’t share those outings with his sales team members. Only his largest and most profitable customers had Tom’s hotline.
You can imagine what happened when he tried to sell the company. Tom hadn’t made any connections with his team at the highest levels on those accounts and his contacts were not too enthusiastic about losing their direct contact with the owner (and the corresponding lunch and golf outings).
Action Taken: Ultimately, the transition plan we developed (beginning well before closing) involved Tom’s sharing his relationships with the new company’s senior executive in the sales area as well as members of his own sales and account management team. The new owner developed a gradual plan for the clients to decide when they were comfortable with Tom stepping away (which was less than one year.)
Some of these trusted, long-term clients have actually become Tom’s friends. The business decision may have started the relationship, but I’ve seen this time and again:
- Sellers think their contract depends largely on their personal touch. While that is important, these days clients are running a professional business and have to deliver quality results from a responsive vendor. Your relationships are great, but you wouldn’t have those clients without your ability to deliver results.
- Sellers think their clients only interact with them because of the business relationship. This is sometimes true. It is also true that personal relationships might exist beyond the time the Seller is no longer involved in the business. The relationships are not as one dimensional as some owners think they are.
At the risk of oversimplifying (which is the subject of books!) I recommend that you start with the following steps:
- Take time now to think about what your goals are for your post-closing life. Will you travel, do charitable work, start a company doing something completely different?
- Once you have some goals for yourself, get some energy around them. Research and start planning a long-delayed trip with your significant other or start putting together the blueprints for that vacation home you will be building for your family.
- Have a clear set of expectations for what you will and won’t be doing with the buyer. While the employment agreement is the big picture for this, you will want to know the details for clients, employees and processes will work. There are checklists for the 90-day transition that you might find helpful.
Are you a buyer or seller with questions about how to prepare for this process? If you’d like to discuss your situation, selling or buying a business or preparing your business for sale, please let us know. In the meantime, if you have questions or comments, I can be reached anytime via email: [email protected] or phone at: 224-688-8838.
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