Can I remain the CEO after I sell my business?

Selling your business, your brand, and your life’s work is hard. I’m not talking about the process of the sale, in fact I’m not even talking about getting top dollar for your efforts – I’m talking about the emotional process of moving on. Thinking about the day after the papers are signed and you have to say…”What’s next?”.

When a person devotes years, or in some instances decades, of 24/7 dedication to a company and that responsibility is no longer there, the emotional stress can be devastating. Devastating not only to the individual but to their family members – especially partners/spouses.

So, to answer the question – “Can you remain the CEO after you sell?” – my answer would be another question “Why would you want to be?”

More often than not, individuals who are really ready to pull the trigger and sell do so because emotionally they are done. It could be burn out, it could be the reality of their years left on this earth has now finally hit them, or it could even be pressure from loved ones to stop, slow down, and smell the proverbial roses.

If you are considering selling your business but still want to remain on as CEO, I’m not convinced you are ready to sell. You aren’t ready to give up control of the company, you aren’t ready to emotionally let go. There’s nothing wrong with that, but it’s something that should be addressed and addressed honestly. I’ve seen too many business owners start the process and let it drag on for years because there is never a good enough deal, when in fact the deal had nothing to do with why the business didn’t sell. Internally the owner just couldn’t do it, and ergo found excuse after excuse as to why the deal was a bad one, or the new owners weren’t right, or the price wasn’t there. I’ve also seen owners subconsciously sabotage the process by refusing to handle the due diligence needed.

There are solutions:
Clone yourself.

If you are also acting as President, perhaps the right solution is to bring in a hands-on President who will run the day to day, and you take on the role of a true CEO – more of a guider, visionary, and mentor. This will allow you to stay involved, yet free up your life to do more “retiree type” activities. A compromise if you will.

Bringing on a President and taking yourself out of the day to day operations will help you look more favorable as a company when you are ready to let go of the reigns. Potential buyers prefer not to have owners involved in the actual running of the company. Our rule of thumb is any owner ready to sell should be able to take off for a month at a time – unmissed. Emotionally that’s hard to swallow for some owners, but it’s part of the transitioning out process that we work on.

Start the process early and bring in the cabinet.
Bring in Private Equity

Perhaps you still have some gas in the tank but don’t have the funds to take your company to the next level, or simply want to stay active but take some chips off the table. In these situations, a private equity group looking for a “platform” company could be the right answer for you.

Such a “sale” would involve recapitalizing the company so that the private equity group would own 60 to 80 percent of the company, leaving you with the minority interest. You would hold no debt personally, have additional support and resources to grow the company, and ideally, sell your minority interest in 5-7 years at a higher price than you received for the majority interest.

Strategize with family
Take some time to honestly talk about the selling of your business with family, so you can have a clearer picture of what actually happens “Next”. Often the unknown is far scarier than the reality.
Bring in the cabinet

2-5 years before the sale of your business, or if you are thinking you may be ready, now is the time to bring in your cabinet of experts. Start having conversations with your attorney, your accountant, and begin the process of working with a reputable M&A firm.
Selling on your own rarely works, business owners aren’t ready to deal with the complex legal issues and often get burned on the deal in some fashion or another. In other words – be smart, talk to the experts and be prepared.
I’ve done hundreds of deals in my career, I can promise you that the ones that go smoothly are the ones where the owner is crystal clear that they are emotionally ready to exit but are excited for “What’s Next!”

Tags: Selling your business, CEO, Mergers and Acquisition, M&A, recapitalizing, private equity, family, brand, business, president, business for sale, Mike Camerota, Touchstone Advisors