Even as the economy struggled to find its footing in 2021, business-for-sale transactions bounced back by 14 percent last year. Change is often the forerunner to opportunity. So, if you’re wondering whether now is a good time to sell your business, you’re not alone.
Many business owners looking to sell are returning to the market, optimistic that they will receive the right price for their company. According to BizBuySell’s Insight Report, sale prices increased 16 percent year-over-year. Businesses with strong financials are looking even more desirable to buyers.
As an owner, selling a business is very exciting. However, it can also be bittersweet. Many of the business owners I’ve worked with have poured their lives into their companies, and in those cases, it can be hard to separate your personal identity from that of your business. The good news is that, in many cases, it can be possible — and even preferable — to stay involved with your company for some time post-close.
The advantages of staying on after selling your business
No one knows your company as well as you do. When you decide you’re ready to sell your business, offering to stay can increase the sale proceeds. This is especially true for complex companies or those that depend on deep relationships with key individuals such as vendors and clients. Depending on what is needed, you could stay part-time, full-time or as a per-hour consultant to ensure that the transition goes smoothly.
Of course, staying on after the sale confers personal advantages, too. A longer transition process can give you time to adjust and plan for the next phase of your life. Before selling your company, it’s a good idea to gain clarity on your goals and ambitions. Ask yourself a few questions: Why did you start your business in the first place? What type of work excites you? Your goals could be something as simple as “I want to give back to society” or “I want to live an adventurous life.” Once you’ve identified what you want, it will be easier to decide how you want to spend your time — and that might mean staying on in some capacity.
If you’re considering staying on after selling your business, you’re probably wondering what your involvement in the company could look like. These four roles give you the chance to keep contributing to your business’s success while slowly phasing yourself out.
For a period after the sale closes, you might be able to continue in your current role as CEO. However, to successfully implement this strategy, you’ll need a well-designed exit plan. Having a formal exit strategy prepared before selling your company makes it easier to carry out informed decisions when you make the choice to leave.
Surprisingly, 48 percent of business owners who want to sell don’t have an exit strategy in place, which can lead to hasty and disorganized sales. By clarifying your exit plan, you’ll be able to come to the negotiation table with clear answers on how long you plan to stay and why you should continue in the role, putting the new buyer at ease.
As a business owner and CEO, you’ve had a lifetime to develop the skills needed to succeed in your industry. That means that your experience is practically irreplaceable.
Nearly 15 percent of Fortune 500 CEOs started in sales roles. Past sales experience at your company, buffeted by your industry connections, could make you a great fit for a functional specialist role post-sale. Or perhaps your business is in a technical industry and offers a complex product. In that case, you may enjoy continuing to do technical design in some capacity. By staying on as a specialist, you can push your company toward success even after you’ve sold your business — often continuing to do the work you love, too.
3. Board Member
Oftentimes, CEOs move into board member roles once a company has sold or after a new leader has taken over. After stepping down as CEO at Twitter, Jack Dorsey became a board member in 2021 and will leave the company entirely after this year’s meeting of stockholders. Although this isn’t a business sale, it’s a great example of a founder gracefully and carefully passing the torch.
Typical board member responsibilities include providing business direction, recruiting executives and monitoring business functions. By transitioning into a board role, you’ll be much less involved than a full-time employee but can still have a positive effect on the company.
The demand for business consultants is growing faster than the average United States work role, with an estimated 11 percent demand increase projected between 2019 and 2029. And given that two in five new CEOs fail to meet their objectives in their first 18 months on the job, staying on in a consulting role can give the new leadership team peace of mind. If you’re happy to relinquish control of the business but still want to help in some way, providing occasional business consulting could be a great option.
If you want to sell your business, it’s important to prepare for what your personal and professional life will look like post-sale. Even if a sale makes all the sense in the world on paper, you must remember that there are still human beings involved on both sides. Choosing to stay on after selling your business creates a more successful transition for both you and your buyer.
Original source: Entrepreneur