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flops back and forth between the emotional stages - it is not a linear
progression. It is all about finding cognitive strategies to help guide you
through the emotions that hit you. It helps steer the emotions in a way to
help process a sale of the business. " Exit planning itself can be akin to a
grieving process.
There is one indisputable fact - 100% of owners eventually will exit
their business. It could be through family succession,
sale, liquidation, closure, death or any number of
reasons - many of which are outside the owner's
control. According to the EPI, 50% of these exits are
involuntary, and 40% of business owners lack even a
basic continuity plan (should something happen to the
owner). When it comes to exit planning, denial is the
biggest hurdle. When we talk to business owners and
ask when they plan to exit, the typical answer is three
to five years. Ask them three to five years from now,
and their answer again is three to five years. Denial is
clinging to a false reality, and it plays a significant role
in why 70 to 80% of businesses don't sell.
When we are asked by business owners when they
should start exit planning, our answer is always a
resounding " NOW! " Whether the owner is in their 20s
or their 60s, we have never heard a client complain
that they spent too much time planning. Planning
leads to business optimization, better decision-making
and less owner-centricity, all of which will drive up
value in a buyer's eyes. According to John Dini, author
of " Your Exit Map, " " Five years is a reasonable planning
time. Ten years is better. There is no time frame that's
too far out to be thinking about your exit. "
Many owners get stuck in denial indefinitely.
Overcoming denial is not easy, and it takes a lot of
time, effort and focusing on the bigger picture. We
start with a preparedness assessment and a valuation
because denial often manifests itself in postponing
a departure and what an owner perceives as the fair
market value for the business.
How can one get past denial? Examine your fears,
think about the consequences of doing nothing and
identify the irrational beliefs and your reality. Most
importantly, talk to someone - a trusted business
advisor, friend or loved one you trust and express
those fears and emotions. Many owners we talk to
express gratitude and relief that they have someone to
talk to because they cannot share their concerns with
those in the business.
Once a business owner identifies those fears,
irrational beliefs and emotions that led to their denial
- it is only natural to become frustrated. We have
seen owners become frustrated when examining their
preparedness - " I should have been doing this years ago. " We also see
it when they receive a financial valuation of their business that came in
lower than what they were expecting - " Can't they see what I see? "
Unfortunately, no appraisal can account for the blood, sweat and tears
the owner has poured into the business. This stage is also a time of
reluctance to make a change (they can't see a path forward) and inevitable
regrets - things they should've done, changes they should've made and
affixing blame.
How to get over the anger? Lean into it - don't try to avoid it. Also, give
yourself grace. According to Patrick Downing, " This is a time for owners to
appreciate what they have accomplished in their business - the clients,
customers, and families they have helped. It helps work through the
negative cognitive thoughts, beliefs and attitudes surrounding their exit
from the business. "
Hope is not a strategy, and this stage usually involves the hope that
an individual can avoid a cause of grief or regain some control after the
denial and anger stages. While negotiation is generally welcome in exit
planning, this type of bargaining is different, detrimental and usually
involves changing the timing or postponing exit planning.
Bargaining is essential because the owner is willing to concede
the outcome but wants more time. This stage can be uncertain, but
thankfully without the denial and anger that can
create major planning obstacles. Eventually, when
there is no bargain to be had and the temporary
pause has ended, it leads to the fourth stage:
According to Patrick Downing, the most profound
depression he has seen in retirements is among
high-level entrepreneurs - " They simply can't deal
with what happens when they are just 'John Smith,'
and not the president of some company. " During
this stage, the owner will despair at recognizing
their mortality. In this state, the owner may become
uncommunicative and closed off, and may also be
depressed about a buyer's offer, the due diligence
process, or even his/her future identity or legacy.
Some owners struggle mightily with this stage - they
are just too emotionally wrapped up in the business.
Consequently, this can be an ideal time for the
owner to switch gears, have fun optimizing their
business for a sale, and pour themselves into the
planning. According to John Dini, " As the company
grows in your chosen direction, you could just be
having too much fun to leave on your originally
planned date. " There is no antidote for depression
quite like having fun and finally making the leap
from working in your business to working on your
business. In addition, this is where your trusted
advisor can keep you focused and be an important
sounding board. According to Downing, " Now you
have to redefine your life, and this can be a creative
time with no playbook but starting at ground level
again. " Fun for some, scary and uncertain for others,
but necessary.
We initially thought that our clients, the ones who
burst into tears, were in a state of depression. They
assured us it was quite the opposite. " I can't fight it,
so I might as well prepare for it. I'm going to be okay
and ready for what comes next. " Acceptance! They
have since been active in optimizing their business
and preparing it for sale. Having just met with a
business broker - their target date to sell is this fall.
Downing says, " Exiting a business is often an
issue of identity. Is your work who you are? Preparatory grieving of the
business is an important step when it comes to an end. So many do not
prepare for what happens when they sell a company. "
You can have the finest advisors, achieve value for your life's work
beyond your expectations, and be financially set for your retirement.
However, if you are not ready emotionally - then you could be one
who " profoundly regrets " the sale of your business and end up grieving
it for years. Exit planning is not just about the transaction but also the
transition of your life. Grieving the loss of your business upfront will
allow you to leave it on your terms.
Chris Cimaglio is a managing partner of BEST Human Capital & Advisory
Group, a retained executive search and human resource consulting firm
based in Indianapolis. He can be reached at

Big Grower September 2021

Table of Contents for the Digital Edition of Big Grower September 2021

Big Grower September 2021 - 1
Big Grower September 2021 - 2
Big Grower September 2021 - 3
Big Grower September 2021 - 4
Big Grower September 2021 - 5
Big Grower September 2021 - 6
Big Grower September 2021 - 7
Big Grower September 2021 - 8
Big Grower September 2021 - 9
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