“I can’t play golf every day.”
“My wife wants to see more of me — but not at every breakfast, lunch, and dinner!”
“What do other ex-owners do after they’ve sold out?”
Failing to answer these concerns can create vacillation, reluctance, and ultimately, an unwillingness on the part of many owners to proceed with planning for their business exits.
To examine these concerns, lets analyze a panel of former business owners involved in the owner to former owner transition. All three reported that selling out was the “best thing possible for me and for my family.” That said, each owner approached the sale differently and each has pursued different interests in its aftermath.
Tom Frankl was 62 when he sold his Engineering firm. He was prompted to sell first when his accountant introduced Tom to Exit Planning and helped him put in place a successor management team. Complementing this concrete Exit Planning step was Tom’s realization that his emotional connection to the business was loosening. When these objective and subjective events converged, Tom began working with his advisors to orchestrate a sale.
Bill Dirrito, the owner of a staffing company, entered his business with one goal: reach $5 million in sales and sell out. Bill reached that threshold and determined that he’d have to make a huge investment to retain his current market share so he hired a transaction attorney and a business broker and sold the company.
Unlike Bill, John O’connor, the 55-year old owner of a low-tech manufacturing company was not focused on an eventual sale. In fact, he didn’t want to sell because he felt he finally “had it going just right.”
When confronted with the idea that the time to sell coincides with the existence of continued upside potential, John started thinking about the hard times he’d been through (2008 – 2012). If hard times returned, he wondered if the company could survive and knew that losing his “upside” would be the least of his worries. He, too, made the call to his advisors.
Having all arrived at the closing table via different routes, each now-former owner has found a similar satisfaction in the decision to sell and in life after the sale. Tom arranged his sale so that his employees kept their jobs and gained greater career opportunities. This gave and continues to give Tom more peace of mind. While he did not have a detailed plan in place for life after the sale, he quickly found new outlets for his energy. He is teaching at a community college. He’s spending time with his wife and family, has time to travel the world, is considering developing some farmland and has taken an active role in community philanthropy. In Tom’s words, “One of the things I appreciate most in this ‘retired life’ is that it isn’t a ‘retired life’ at all.”
John echoes Tom’s comfort with this decision. “Of course I wondered what I would do [after the sale] because I was in that business for 30 years. But the day I walked out of there I never looked back. I never missed it. It’s incredible but my schedule is calendared 18 months ahead.” On John’s calendar are motor home vacations, developing an industrial park and expanding his world class collection of race cars. John leaves the house by seven each morning and doesn’t find his way home until late afternoon.
Bill, the planner of the group, anticipated that he’d need a place to go— outside of his home — on the day after the sale. He rented and equipped an executive suite and mapped out the first three months after the sale. Today, he spends time on his hobbies (golf, horses and motorcycles). He has educated himself about investing, advises other business owners and works collaboratively with his investment manager.
By any yardstick these former owners remain engaged and vital. They have moved into a new era in their lives — an era untroubled by financial concerns. Not every former owner has the same experience, but our firm believes that owners who thoughtfully plan their exit increase the likelihood that they will be satisfied with their exit and whatever follows. We’d like to sit down and talk about the role that we can play in crafting a future that works best for each and every business owner.
Allen Business Advisors is a business broker that understands the need and importance of pre-sale planning for businesses selling in the near term and Exit and Succession Planning for businesses selling in the medium to distant future. We are the business broker for architects, engineers, healthcare practitioners and providers of business services.
1309 Beacon St., Suite 300
Brookline, MA 02445
6701 Democracy Plaza Blvd
Bethesda, MD 20817
The information contained in this article is general in nature and is not legal, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a matter, we will always work closely with you to help you gain access to the resources and professional advice that you need. Allen Business Advisors is a member of BEI. Allen Business Advisors is the business broker for architects, engineers and business service firms.