Jared Pilon
When business owners decide to sell, they tend to focus on the financial and legal aspects of the sale. They work closely with accountants and lawyers to ensure a tax-efficient and legally sound transition. However, one of the most crucial yet neglected aspects of selling a business is emotional readiness.
Many entrepreneurs invest decades of their lives into building their companies, making the exit an emotionally charged process. Without proper planning, this can lead to seller’s remorse.
Selling Your Business is More Than a Transaction
We recently had a chat with David Prowse, an advisor with M&A Evolution, who emphasizes that business exit planning should be approached as a three-legged stool:
Business Readiness
Ensure your business is structured, profitable, and appeals to potential buyers.
Financial Readiness
Establish your personal financial security post-sale, including tax implications and estate planning.
Personal Readiness
Prepare yourself mentally and emotionally for the transition.
Understanding the Emotional Side of Exit Planning
The emotional aspect of selling a business varies based on your personal and professional circumstances. Business owners may grapple with more concerns than just financial ones.
Loss of Purpose
For years, your business has given you a sense of purpose, structure, and a daily mission.
Concerns About Employees
Many business owners feel responsible for their employees' job security and well-being.
Attachment to the Brand
The thought of seeing your business rebranded, merged, or altered by a new owner can be unsettling.
Anxiety About the Future
Not having a clear post-exit plan can lead to uncertainty and regret.
How to Avoid Seller’s Remorse
If you're considering selling your business, follow a few steps to ensure a smooth and regret-free transition.
Start Planning With Your Accountant
Exit planning isn’t just about getting the best price; it’s about ensuring the transition aligns with your long-term goals. Work with your accountant to ensure a tax-efficient sale and explore different exit options. Selling to a private equity firm, a competitor, or internal management all have different financial and emotional implications.
Identify Your Post-Exit Vision
Many business owners struggle after selling because they haven’t planned for what comes next. Ask yourself:
- What will I do with my time?
- Will I start another business, consult, or retire?
- How will I stay engaged and maintain a sense of purpose?
Having a clear plan for post-business life can help ease the transition.
Consider the Impact on Employees
If taking care of your employees is a priority, structure the sale to ensure job security and business continuity. Selling to a buyer who aligns with your values when it comes to your employees can make a significant difference in how you feel post-sale.
Understand Your Financial Future
It is common for business owners to overestimate their financial readiness. Work with your accountant to create a detailed financial plan that accounts for taxes, retirement, and lifestyle changes.
Emotionally Detach Before the Sale
Gradually reducing your involvement in the business before selling helps to ease the transition. Delegating responsibilities and stepping back from day-to-day operations prepares you and your team for life after ownership.
Selling Smart, Not Just Selling Fast
Selling your business is a monumental decision that extends beyond numbers in your bank account. By addressing the emotional side of exit planning, you can ensure a transition that not only secures your financial future but also brings long-term fulfillment.
Legacy Accounting LLP is here to guide you through this process. Our accountants understand the financial intricacies of selling a business but also the emotional side. Schedule a consultation today through to start planning your future with confidence.
David Prowse, a merger and acquisition advisor at M&A Evolution, is also available to help when you are ready to sell your business. You can contact David at or (613) 518-0776 extension 5.
Want to hear more about this topic? Check out the Tax Talk Podcast
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