Selling a business is an interesting ride. I’ve had the fortune to do it twice, once to a private equity company and once to a public company. In both cases I learned things along the way that I wish I had known (which is always the case, for example here are 10 things I wish I knew when I started my first company).
10 things I wish I knew when I sold my business(es):
1. Don’t get too distracted from running your business. When selling my first company, we worked so hard on the process of the sale that we inadvertently slacked off on business development (i.e. getting new clients). We felt the pain of that a few months after we closed the sale. The second time around we were smarter about not getting too distracted by the process.
2. Think past the sale itself. With my first sale, my partners and I focused all of our attention on the details of the sale (what the valuation would be, how would it be structured, etc) and very little about what would happen with us individually. We weren’t smart about making sure we had the proper roles, salaries, and autonomy within the new company.
3. Understand your value going in. I’ve learned a lot about how to value a services-based business through the process of selling Spunlogic and Engauge. There’s an art on how to value your business and I like to think I’ve gained a lot of wisdom in that area but it would have been great to have that experience going in.
4. Get important things in writing. When we sold Spunlogic, one of the core elements of our culture was a company cruise. The CEO of Engauge promised my staff in the first meeting that we’d get to continue the tradition of taking an annual company cruise. We of course never took a cruise again. In this instance I don’t really blame the CEO, it was a hard thing to figure out with five offices, but if I had had it in writing then we would have been forced to make it happen.
5. Get to know the people you’ll be working with post-acquisition. This isn’t necessarily something that, had I been better about it would have changed any of my decisions, but I realized early after my first sale that I barely knew these new people that I was going to be in the trenches with and spend the next several years of my life with. It’s easy to get caught up in the dollar signs and deal structure and overlook this important step in the process.
6. Understand the process before you start. It’s always going to take longer than you thought and knowing the steps can help you prepare. Both times I went through this process it took many months longer than I had expected. The next time I’ll be more prepared.
7. Be as open as you can when communicating with your employees. This is a tricky one. There is only so much you can share with your employees when working on an acquisition of your business. Understandably, going through this process can make people nervous. Fear of the unknown can be crippling for productivity and stability within the organization. However, you can talk openly about the possibility of one day being acquired and help people get comfortable with that reality and what should be expected.
8. Get your senior leadership involved early. I should clarify that as “senior leadership that you really trust”. Then I should probably point out that if there are senior leaders that you don’t really trust, they probably shouldn’t be in your organization. Having your leaders on board and excited about the acquisition is a key to making sure the process goes smoothly and everyone is pumped after the sale is done.
9. Distract as little of the company as possible with the process. Going through an acquisition can be very time consuming and distracting for everyone involved. Having done this a few times, my personal belief is that its best to distract people as little as possible and have the brunt of the work land on a few individuals. With the first sale, I was one of the few who did the heavy lifting; however, with the second sale I was fortunate enough to be spared a lot of the dirty work.
10. Have a personal plan. With the first sale, I didn’t have a long-term personal plan post-sale. I sold and then decided to “stay for a while” at the new company. And while I enjoyed the five years I spent with the new company, I should have assessed the situation after a certain period of time and re-evaluated my personal plan. With the second acquisition, I mapped out exactly what I wanted to happen and worked hard to make sure the plan was executed.