StartupJournal highlights two entrepreneurs, Barbara Meade and Carla Cohen, who thought they had their exit plan in place for their bookstore.
“As they reached their mid-60s, they wanted to make sure their business would thrive into the future. Since neither had children interested in taking over the store, four years ago they hired a younger entrepreneur, Danny Gainsburg, with the understanding he would eventually buy them out.”
But, their plans soon came unraveled as their employees rebelled against the transition. There story is an informative case study on the challenges of the exit process.
I remind entrepreneurs to keep a few things in mind regarding exits:
– The first offer is rarely the one that works. Don’t get too excited and don’t spend the money until it is actually in the bank. Half of all business sales that actually make it to closing actually complete the sale, and a very large percentage fail long before that point.
– Staff will always get anxious during an exit no matter how well it is planned. The process is disruptive and can become quite chaotic. Keep it as quiet and low key as you can for as long as you can. Avoid making a highly visible long term transition.
– Twenty years can be short-term for exit planning. Don’t wait twenty years to start your planning like the entrepreneurs did in the StartupJournal profile.
– Involve your accountants and lawyers throughout the process. It will be expensive, but it is worth the costs given the risks of making any missteps.
– Integrate the needs of your important stakeholders into your planning. But, in the end remember that it is your business you are exiting.
For more tips on exit planning see my earlier post on this topic.
When It’s Time To Sell
The Entrepreneurial Mind: I remind entrepreneurs to keep a few things in mind regarding exits:The first offer is rarely the one that works. Don’t get too excited and don’t spend the money until it is actually in the bank. Half…
Have you sold a company? I agree with the first point: “The first offer is rarely the one that works. Don’t get too excited and don’t spend the money until it is actually in the bank. Half of all business sales that actually make it to closing actually complete the sale, and a very large percentage fail long before that point.”
Yes!