I was working with a client on the acquisition of one of his vendors, a very small company. He’s worried about losing the product as the owners are in their mid-70’s, their company is not growing, and haven’t had any product improvements in years.
Then we hit a roadblock. The owners can’t see themselves leaving. Buy the company and we’re done in a few months? No way! We want to be around helping run the business for a few years. Well, that won’t work because a couple 75 year olds with a business in slow-motion won’t fit in a growth culture.
Oh the precious baby syndrome struck, and struck hard. Here’s how to avoid this:
- Figure out what you’ll do if you sell your business. It doesn’t matter if it’s travel, golf, grandkids, a new and different startup, or volunteer work. Know what you’ll do.
- Consult with your financial planner and figure out what kind of lifestyle or investment capital you’ll have post-sale (your next great adventure in life).
- Maximize your company’s value. This means show multi-year growth, have solid and growing profits, and eliminate any dependency on you, the owner.
And expect buyers to be skeptical if you’ve had one good year out of three to five years, as they’ll think it’s a spike not a trend.
“The purpose of a business is to create a customer.” Peter Drucker