By Joe Freedman, EO Nashville member and CEO of Music City Tents
Selling your business is one of the most impactful decisions many of us will make. For that reason, it’s smart to seek advice from those who have navigated the same waters. Here are six tips to help you along the way:
1. If this is the sale of your first business, you may be surprised at how it affects you on an emotional level. It’s completely normal to feel a sense of loss, and some even experience symptoms of depression following the sale.
2. Aim for getting as much cash as possible at closing. Earn-outs, payouts and stock deals often don’t turn out like you think they will and increased payment contingencies increase the risk of not getting paid. Make sure the amount of money you receive at closing is sufficient to make the sale worthwhile because that could be your only payment.
3. Don’t compare how much the investors made on the sale of your company with the amount of work you put in to make the sale possible. Your salary is commensurate with the amount of time you spent working in your business. The equity shares are commensurate to the amount of risk your investors undertook to fund your business.
4. Beware of the “Amnesia Effect.” The first time you sell a company, it will seem as though things just fell in your lap. Trust me: getting to the exit is hard. You’ll quickly remember that when you launch the next one.
5. Serial entrepreneurs like starting and love exiting, but tend to hate the middle part. That’s why it’s important to hire talented operators and keep them motivated.
6. Build your companies under the umbrella of a happy marriage. Divorce is an expensive exit. That said, happiness feels like a big paycheck, too.