- How to find your purpose after selling your business.
- How to get your finances in order.
- The importance of a professional cash manager.
- Why you will need a new personal balance sheet.
- Why it might make sense to acquire a new business after selling your company.
At Acquira, a lot of our business is based around buyers – teaching them how to find deals, appraise companies, conduct due diligence, and negotiate the legal process of acquiring a company. These are the people we affectionately refer to as AEs, or Acquisition Entrepreneurs.
However, there is another group of people that we work with almost as frequently as AEs: business sellers.
Acquira has built relationships with many sellers over the years, and we’re very careful to ensure we provide them with a graceful exit. After all, in most cases these people have built a company from the ground up and they want to see that what they built isn’t torn down the moment they walk away. They’ve created a legacy, and they want to ensure that it’s taken care of.
Selling a business can be such an involved process that people begin to lose sight of what their life will look like after the deal is done. Fortunately, many people have already gone down this path and we’ve got a good idea of what life looks like after the papers have been signed. This may include pursuing new ventures entirely or acquiring a completely new business yourself.
I Sold My Business, Now What?
The sale of a company is often seen as a significant marker of success, according to a whitepaper written by the Columbia Business School. However, selling a business can often represent a loss of identity and community for the seller, the paper continues. “Entrepreneurs may go through several stages of recognizing and coping with this loss, and this process can sometimes take years,” the authors write.
It’s a sentiment that Ken Lavertu agrees with. Ken recently sold his real estate appraisal business for a healthy sum, but he found the transition difficult at first.
“I kind of see it like birthing a child,” he says. “There's a little bit of postpartum that happens because you get lost in the excitement of selling. I've had people tell me it's very rare that somebody gets a liquidation event in their lifetime and so I should be excited about it.”
But it doesn’t have to go down that way. If you prepare for the next step and are ready for the change, the adjustment period is much more manageable.
Ken advises anyone selling their business should prepare to restructure their life somewhat post-sale. “Think about what you want your life to look like because I didn't really know. And I think it started freaking me out a little bit.”
To begin with, think about what makes you happy. For Ken, that meant taking another bet on himself. “I realized I'm a builder, and a builder for my own dreams and not building somebody else's dreams,” he says.
Try not to make it about money. Maybe you enjoy fishing or painting. Maybe you just want to create miniature villages in your backyard.
Obviously, everyone wants to feel secure and comfortable, but it’s been proven time and again that accruing more wealth does not bring increased happiness.
As pointed out by the blog Financial Highway, “If you truly want to be happy then your happiness should never be based on external or material things. True happiness comes from within; a poor man living in the mountains of Afghanistan is often happier than a Wall Street CEO living in a NYC Penthouse.”
Instead, think about how you can create happiness in your life outside of work. This usually comes through a strong sense of purpose and a connection with people or community. Here are a few things to consider when trying to find happiness after selling your company.
1. Know your values
Values are the building blocks of our lives. They’re the things that are important to us above all else and where we make zero compromises. They often include things like family, friends, freedom, honesty, love, adventure, achievement, and many more.
The list can be nearly infinite, but it is also incredibly personal. Take a few values from your list and begin to prioritize them. What events and experiences will allow you to best realize them?
2. Understand your superpower
Everyone has something that they’re naturally good at. It’s their core strength or their gift. For some folks, this can include public speaking, for others it might be in areas like teaching, influencing, analysis, social interaction, problem-solving, or discipline. There’s usually a gut feeling associated with these things – you know what they are.
What do people usually compliment you on? What have your past experiences shown you? What’s your favorite type of project to dive into?
3. Recognize your passions
The things that we truly can be passionate about can often be found in small moments. Those spaces in time where we feel invincible. Whether it’s working on a new project, taking care of a child, climbing a mountain, or cooking a great meal, they can be anything as long as you feel them at your core.
Try and keep a list of these “passion moments.” You should also try and pay attention to when other people in your life are having these moments. It’s a list you can add to for the rest of your life and it will help you gain clarity on what truly lights a fire under you.
One of the things that Ken realized he was passionate about was creating jobs for people and building a positive work environment. At his last business, he hired more than 50 offshore workers and was able to drastically improve their quality of life – something he wants to continue doing in any future endeavors.
“I'm providing an incredible life for them, their families, and their extended families. I get thank you letters all the time. It's like, why wouldn't I keep doing that?” he says. “It's not like I'm getting a huge return, but it's good. I just love being a part of people really owning and loving their jobs and loving coming to work. That's a big part of my culture.”
These three steps – know your value, understand your superpower, and recognize your passions – can help you recognize what you’re passionate about. Once you have a better understanding of yourself and what inspires you, you can begin to pursue those activities and moments that fulfill that within you.
Now that you have an idea of what will give you purpose post-sale, it’s time to deal with the reality of your situation: the practical considerations that follow the sale of any business. After all, you likely suddenly find yourself with a lot more cash and a new direction in life. But before you start planning your motorcycle trip through Patagonia, there are certain responsibilities you need to take care of.
Organize Your Finances
It’s very likely that your money is sitting in several different places. These locations can include things like a family trust, various bank accounts, or holding companies.
It’s not uncommon for business sellers to become overwhelmed with the amount of paperwork they need to fill out post-sale.
It’s not uncommon for business sellers to become overwhelmed with the amount of paperwork they need to fill out post-sale. Many people find it useful to hire a part-time bookkeeper to help them keep track of things. They will undoubtedly pay for themselves when it comes time to file taxes.
Find Professional Cash Management
Many business sellers wind up simply parking their new funds in cash for as much as a year. It’s important to note that ordinary bank branches are meant for “retail” clients and they’re several layers removed from the actual wholesale money market. More importantly, each of those layers takes a little slice of the investment pie before it gets back to you.
The sooner you find a professional money manager to handle your investments the better. When you’re dealing with someone with direct access to the money market, you can be sure that you’re receiving the best rates possible.
However, as Ken found out, it’s important to be aware of your needs and what stage of life you’re in.
“I talked to a wealth advisor and it was a horrible experience,” he explains. “I don't want to just sit on my money and not have control over it. I just realized that wasn't my model.”
In Ken’s case, simply investing the money wasn’t what he needed. Instead, he wanted to put that money to work.
Create A New Balance Sheet
You’ve sold your business, now you have more cash than you’re used to dealing with. This is a good time to take stock of your affairs. You’ll need money for day-to-day expenses, but which funds you access for those expenses may have different tax benefits or drawbacks. For example, funds that are in a family trust may really belong to the beneficiaries (like your husband and kids).
At any rate, a detailed balance sheet will provide an effective overview of your accounts and help you identify any problems that may require your attention.
The “I Sold My Business, Now What?” Checklist
- Create a budget for yourself
- Put some money into an emergency fund
- Discuss your next steps with your family
- Pay down or eliminate any debt
- Check your retirement fund
- Outline your financial goals
- Consult a financial professional
Continue To Support The Buyer
When anyone sells their business it’s easy for some to wash their hands of the whole undertaking and concentrate on a new project or simply spend your time staring at the balance of your bank account. But it’s important to continue supporting the new owner as much as possible.
After all, that person is in charge of all of the employees who you hired. He or she is responsible for following through on some promises you made. He or she will be the only person maintaining your legacy. And he or she is likely going to need help.
Buying a business and growing it isn’t easy and as the seller, you’ve built up a wealth of knowledge and experience that is invaluable to the new person at the helm. Do your best to stay in contact with them and to help them out when you can. It will go a long way to ensuring your legacy is sustained.
Consider Buying Another Business
When it came time for Ken to step away from his business, part of the postpartum problem was that he realized he wasn’t done working. Sure, he could put the money into a mutual fund or a hedge fund and watch it tick up by 12 percent each year, but that wasn’t going to make him happy.
“I'm only 39,” he says. “If I was 60 years old, or even 50 years old, I might be just want to take it easy for the next five to 10 years and then figure something else out. But that's not who I am. And that's not where I am in life.”
Instead of resting on his laurels, Ken began to look for other options. It was that search that eventually led him to Acquira.
“I started Googling ‘investing’ and Acquira kept coming up in my searches both in Google and Facebook. And I thought what is this buying another business thing? That just sounds like you’re buying a job. But the more I dug, the more I realized this is my speed.”
“It just really got me thinking about the itch that I want to scratch, which is that I'm a builder and I can buy other good, beautiful businesses that are small and make them bigger and more efficient. So that was a perfect puzzle piece fitting together for me. And so that's how I found Acquira. That's how I found my next step.”
Ken has partnered with Acquira’s Search Partnership Program to help him find his next endeavor. The Search Partnership Program is our off-market deal sourcing service, which helps Acquisition Entrepreneurs find businesses for sale that have yet to be listed through traditional means like business brokers. If you’d like to learn more about the Search Partnership Program, schedule a call with us today.
If the words “I’m selling my business” inspire more fear than excitement, don’t worry. That’s a normal reaction. Fortunately, there are a number of steps you can take to ensure you’re personally fulfilled and financially astute following the sale of your business.
At the end of the day, the thought “I sold it, now what?” should inspire excitement rather than apprehension. The road is wide open in front of you and there’s nowhere you can’t go. Have you ever sold a business you built yourself? Let us know your story in the comments below.
Of course, some people who sell their business often want to pursue different or new business opportunities. For many business sellers, especially those who could be considered voracious learners, it may make sense to buy a completely new business. These people want to continue learning and growing with new experiences.
Given that selling a business and buying a business require different knowledge bases and skill sets, you might be interested in learning what it takes to acquire a business of your own. We provide all the training, tools, systems, templates, and checklists you need to acquire a business through our Acceleration Program. The course teaches you how to:
- Find a business that fits your criteria
- Carry out the initial due diligence
- Negotiate a win-win offer
- Issue a letter of intent to purchase the business
If you’re interested in exploring your own business acquisition appetites, give us a call!
- Don’t make post-business ownership life about the money.
- Discuss your plans with your family.
- Find what makes you happy.
- But still, you probably have more cash now than ever before. Be sure to keep your finances in check.
- Consult a financial professional.
Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.