Selling Without Regret: What Owners Should Know

By John Herubin, Managing Director

Most owners spend decades building a company by investing both emotional and financial equity to achieve success.  When selling the business is the desired exit option, that period may only seem like a blip relative to the time it took to create their “other child”.  A sale is not a single event that happens at the closing table. It is the last phase of building the business, and it rewards the same patience and preparation that built everything before it. It is often an incredibly emotional event for the owner in that it’s not only life-changing money, but impactful on their identity and relevance post-sale.  In our experience, the owners who prepare both financially and emotionally for the sale are those who experience the least amount of regrets post-transaction. They are typically the ones who start thinking about these aspects while they are on the journey of building the business.

A sale is a phase, not a transaction

When you treat a sale as a transaction, the clock starts the day a buyer calls. When you treat it as a phase of the business, the clock starts years earlier, and that difference tends to show up in the result. Selling on your own terms, on your own timeline, and by your own choice is very different from selling because you have run out of other options. An owner who picks the moment negotiates from a position of strength; one whose timing is dictated by fatigue, a downturn, or poor health rarely does. Being forced to sell by external circumstances also minimizes the ability of an owner to prepare emotionally for what comes next in their personal life after the sale.  A company's value is realized in the sale, not only built in the years before it. That final phase deserves the same attention you gave the rest.

Closing the gap between your number and the market's

Nearly every owner believes the business is worth more than a buyer will pay for it. That is not a flaw; it is natural after years of personal investment. But the gap is real, and it becomes most uncomfortable during due diligence, when the buyer's job is to find every reason to reduce their original purchase price. You do not close that gap by arguing harder. You close it by understanding, early and honestly, how a buyer will actually value the company, and then using the time you have to remove the risks that would justify a lower number. An advisor who is speaking with buyers in the owner’s particular industry every day can give you that read before you are emotionally committed to a purchase price.

Get the business house in order before the buyer looks

Preparation is quiet work, and it is where price is won or lost. Clean books, clear operations, a clear path to growth, and a strong management team that does not depend entirely on you are the things a buyer pays for, and exposure to purchase price reductions an unprepared seller risks. We have seen profitable, growing companies lose real value at the table for no reason other than messy financials or an unanswered legal question. Every issue a buyer cannot resolve becomes a discount they can defend. This work is best done gradually, well before anyone is looking and prevents an owner from having to haphazardly “fix” and repair any deficiencies in the business during the sale process.

Get your mental house in order before the sale

The part owners underestimate is not financial. It is the personal and emotional change that accompanies a sale. For most founders, the company has been a central source of identity and structure for a very long time, and life after a sale is a genuine transition, not a reward that arranges itself. The owners who come through it well tend to think about what comes next before the deal closes, not after. This does not require a detailed plan. It requires being honest with yourself, and often with your family, about what you want the sale to make possible. Owners who skip that conversation are the ones most likely to feel adrift once the deal they worked so hard for is finally done. We’ve heard on numerous occasions the spouse of a selling owner who several years after the sale quips to their significant other that they “married for better or worse, but not for lunch”, implying that the selling owner has not sufficiently engaged in activities outside of the business post-sale.

Bottom line to achieve a regret-free transition

A good exit is not the one with the highest opening number. It is the one you look back on without wishing you had done it differently. That result is built the same way the business was, through preparation (day-to-day blocking and tackling), honest expectations, and time.

Lots of money with no life direction and diminished identity can be more disorienting than feeling burned out running a company.

If a sale sits anywhere on your horizon, the best moment to start getting ready to meet your financial, personal, and emotional goals and objectives is well before you intend to act.

© Copyright by John Herubin, Managing Director, EdgePoint Capital, merger & acquisition advisors. All rights reserved. John can be reached at 216-342-5865