Selling a company is the entrepreneurial dream. With recent reports showing record numbers of small business owners exiting, I was curious about how entrepreneurs fare in the post-exit period. What they told me might surprise you.
Take time to grieve.
Yep, you read that right, you will grieve. If you have an earn-out, selling your business is like giving a child up for adoption and living in the same house with the new parents. It is hard, you are no longer in control, in some cases your employees no longer report to you. It can feel like you have taken a major step backward. This, along with regrets over deal terms and new roles within the larger organization, can leave many business owners wondering if they've made the right choice. To grieve is to heal; it is both normal and healthy.
Rest, grow, and live your dreams.
By the time entrepreneurs make it to the closing table many of them are worn out. Post-acquisition, you will finally have the time and money to take a break and pursue bigger dreams. If you plan to stay on, make it part of your sales clause that you get a long break--even if it is months after the sale. Take time to travel if you can, run a marathon, visit family, or write the book you have always dreamed of. Avoid the temptation to jump into the next big thing right away.
"We work with several aspiring authors, who have successfully exited their businesses and are now pursuing their life-long dream of writing a book", says JT McCormick,
President and CEO of Book in a Box. The publishing company uses technology and a team of writers to help turn ideas into books in under 50 hours. "In addition to accomplishing their life dream, many of our clients have found the process therapeutic," says McCormick. It gives them a chance to reflect and share their ideas and knowledge, and engages them in a process that eliminates their need to jump right into something new.
Just say no.
Entrepreneurs create, it is what we do. It is not a switch that can be flipped off, it is part of our DNA. Just because you take yourself out of the business does not mean that your desire to create and take action is gone. If anything, it becomes accelerated once you have ample time to think. In many cases people will clamor to present new opportunities and partnership ideas to you. You may be asked to sit on multiple boards, run industry organizations, or a host of other things.
"My advice is to take your time making your next move post sale," says Craig Cummings, Co-Founder of Moonshots Capital, an investment firm specializing in investing in high potential technology companies.
"After exiting RideScout, I knew I wanted to work with companies that had the potential to change the world. By being selective about my next steps, I could turn my passion for these companies into the launch of a fund which has since invested in companies such as Slack, Bitium, Harvest.ai, Fair, and ID.me. There were so many interesting opportunities, I had to be selective with what I said yes to."
You may now have a sizable amount of investable capital at your disposal. Before making any large investments make sure you have a plan.
"Equity preservation and income generation are key," says Yuen Yung CEO of Casoro Capital, a private equity firm specializing in income-producing real estate investments. "Having sold a company myself, and served as the president of the Austin chapter of Entrepreneurs Organization, I have seen a lot of entrepreneurs exit over the years. Those who focused on replacing their income through investments that paid regular dividends without eating into their principal ended up using the exit as a long-term wealth building experience."
After taking the time to rediscover passions, many entrepreneurs find deep satisfaction in serving as an advisor or mentor, or they volunteer for a special cause or in their communities.
"When I sold my company to Caliber Corporate Advisors, I spent two months pursuing my dream of raising my children overseas by living in Nicaragua and Costa Rica," says Joy Schoffler, Founder of a FinTech focused PR firm, Leverage PR. "It was really amazing getting the time to read, paddle board, and just be."
"Now that I am home and back in the swing of things, I am looking at everything in a new light. In addition to continuing to serve as a senior advisor at Leverage PR and on AARP's and SXSW's Accelerator advisory boards, I have gotten a chance to serve as an advisor to companies I've had a passion for over the years: Wealth Migrate and The Experience Firm. Having the time and energy to dedicate to companies I believe in is a really cool part of this phase," adds Schoffler.
Slowing down is a learned skill for an entrepreneur. Obviously, under these circumstances, it's one that pays off.