Things are going so smoothly.
You’ve worked through exactly what you want to get out of your business exit.
And you’re steadily working through the Four Pillars for getting the best exit deal: deciding the best time to sell, putting a great advisory team in place, creating a competitive sale process and getting good deal terms.
You’re feeling pretty confident. Everything’s on track to finally get properly rewarded for the blood, sweat and tears of building your own business.
Well, just keep a weather eye open. In my experience, there are four “out of left ﬁeld” issues that often catch business owners off guard during business exits, and they can have a huge impact.
The four “out of left field” issues
Here are the four left field issues that can easily derail your business exit:
I’ll explain them briefly here and then look at them in more detail in future posts.
Left field issue 1: Performance earn-outs
Performance earn-outs are a common feature of larger business exits.
Essentially it involves the business owner continuing to work in the business for a period of time and the ultimate price paid for the business being determined by its profitability over that period.
Business owners who aren’t ready for this scenario are often shocked to find they need to continue working hard in their business for several more years to secure their purchase price.
Left field issue 2: Fatigue
There are two types of fatigue that can have a critical impact on your business exit: business fatigue and deal fatigue.
Understanding the impact fatigue can have on your business exit, particularly on timing, is a critical factor in achieving a successful business exit.
Left field issue 3: Unsolicited offer from a potential buyer
One of the most common catalysts for a business exit is an unsolicited approach from a potential buyer.
Unless you have contemplated this occurring, and are ready for it, you will be on the back foot from day one of your exit if they are a serious, savvy buyer.
Left field issue 4: The emotional roller coaster
For most business owners their business exit becomes an emotional roller coaster.
You can’t avoid the emotional roller coaster, but it helps if you’re ready to deal with the key things that cause and drive it. Most of them will hit during your business exit, and some of them afterwards.
Dealing with the four “out of left field” issues
You can’t avoid left field issues arising during your business exit. They just often do.
However, if you’re aware of them and thought about them before starting your business exit, you will be ready and much better placed to deal with them during your exit.
In my next post I’ll look more closely at the first left field issue, performance earn –outs, and how best to deal with them.