Preparing for Your Business Exit: Essential Advice for Owners

Most entrepreneurs only sell once in their life, but when it becomes reality, many owners find it harder than they anticipated to let go of a company they’ve started and grown. The inability to detach emotionally can hinder a sale, especially if you’re not willing to give up control of aspects of the business.

Early Preparation is Key

Prepare yourself as early as possible by talking to friends, family, and professional advisers about the challenges you’ll face when leaving your business. Start making plans for the next chapter in your life. Most entrepreneurs have a huge emotional attachment to their business. They’ve lived and breathed it for years, and likely made many sacrifices to help it succeed. Their lives and identities are tied up in it.

Navigating Emotional and Practical Changes

Whether exiting due to liquidation, sale, or retirement, letting go of a company is a big moment, and for many, it will bring a host of mixed feelings.

A strong emotional attachment to your company can manifest in many ways, including caring deeply for the team, clients, and proposition. The downside is that this could lead to a mindset that prevents rational and hard-nosed decisions. The result can be owners withdrawing from a sale process or making it too difficult for the buyers as they’re over-anxious about the new owners doing the right thing for the business and stakeholders.

Deals often collapse because the owners can’t let go. Owners realise that their position means a certain status, and offers structure, and then have difficulty imagining how those things could be replaced.

Planning to Let Go

To ensure your proprietorial nature doesn’t jeopardize a sale, hgkc recommends starting the emotional detachment from your company before the exit process starts. We help our clients develop their own personal exit plan using Outcomes Mapping, and begin by asking ‘what must be true for you to feel confident you can leave your business to somebody else to run?’

We encourage our clients to talk about the implications of the exit to people close to you, such as friends and family, and to discuss it with other advisors to benefit from their experience and perspective. Others in your network may have already gone through the process, or are going through it now at the same time as you. Speak to them too to get a feel for their experience, and if they have exited already, what it’s like afterwards.

There are no right or wrong thoughts and no stupid questions. The more you talk through the matter with others, the more insight you’re likely to get into your thoughts and feelings.

Dealing with Your Exit

Before selling a business, you’ll go through a due-diligence process with the buyer, which can be emotionally challenging and exhausting. Once you’ve achieved a sale, there is usually a strong sense of relief and euphoria. After all, you may have been dreaming about your exit and planned it years ahead.

But these emotions can crash once the reality of the change kicks in.

If you haven’t already detached yourself from the day to day running of the business, you will suddenly have lots of spare time, and of course money. What do you want to do with it? Do you want to start another business? Or something more philanthropic or community-based?

You may miss the drive, status, and social structure that comes with running a business. Thinking about how you will replace those things before exiting is vital.

Some may be happy with a new life of leisure. But for most, having purpose is healthy. There are lots of apocryphal stories about people who sell their businesses, retire, and then succumb to ill health quickly. Like riding a bicycle, they need to keep pedalling or fall off.

Financial Considerations

Exiting your business brings a raft of critical financial considerations, such as how to invest a lump sum from a sale, how to start withdrawing your pension or other income, and what insurance cover you need. Planning these issues carefully will help you control the emotional side, too, and make more rational decisions.

Exiting a business is much more than deciding on the mechanism, finding a buyer, preparing for and managing the due-diligence, and agreeing the share purchase agreement. The time spent preparing your self for your exit is vital if you want to enjoy the fruits of all your years of hard work.

Our expertise is in getting to the heart of you and your business. We find the right advice when you need it. We add clarity and focus. We help keep you on track, especially when it's tough.