Contributed by Scott Bushkie, EO Wisconsin, who is founder and CEO of Cornerstone Business Services. With more than 20 years in the M&A industry, Scott is a recognized leader in the field, providing exit strategies, sell- and buy-side transitions, along with valuation services in the lower middle market.
As an entrepreneur who has built a successful business from the ground up, you’ve likely poured years of your life into growing and scaling it—at great personal sacrifice. You’ve lost countless nights of sleep, forfeited vacations and lived lean during cash flow challenges.
So when it comes time to think about selling your business, it’s natural to feel a bit conflicted.
- On the one hand, this is why you worked so hard: To exit and enjoy the fruits of your labor.
- On the other hand, many business owners say that selling their business feels like giving a child up for adoption.
As it turns out, that’s not just a metaphor. Research shows entrepreneurs really do think of their business as a child.
There’s a strong parallel between entrepreneurial love and parental love. Researchers found similar brain activity between founders thinking about their businesses and parents thinking about their kids. In either case, similar areas of the brain lit up, including areas associated with parenting, pleasant sensations, emotional processing and reward.
Researchers say the phenomenon provides a deeper understanding of “entrepreneurial bonding.”
I say it explains why selling your business can be such an emotional rollercoaster. Just like raising a baby, identity, pride, legacy and sleepless nights are all part of building and selling a company.
4 issues at the intersection of parenting and entrepreneuring
As owners decide to exit their business, here are four complex issues we often struggle with:
1. Letting go
Many business owners feel like their identity is wrapped up in their business. Some can’t believe the company can thrive without them. Others don’t know who they’d be without the business.
2. Proud Parent Syndrome™
In the same way parents can be blind to their children’s faults, entrepreneurs may struggle to see their company’s weaknesses. Some owners are unwilling to hear that the business is worth less than they think it is during the valuation process.
3. Sleepless nights
At some point in every merger and acquisition (M&A) negotiation, you’re going to lay awake at night wondering if you’re doing the right thing. Are you getting enough value for your business? Is the buyer a good fit?
Every parent knows what it’s like to lay awake in the middle of the night worrying. When selling, business owners can help avoid sleepless nights by working with an M&A advisor to put their business on the open market without an asking price. When you bring multiple buyers to the table in an auction-like environment, you know you’re making the best deal the market can bear.
4. Legacy over money
When sellers have multiple options to choose from, they sometimes choose a buyer based on culture fit over money. They may accept a lower price as a tradeoff to working with a buyer who will mesh with their team and keep the business local. It’s not unlike parents who want to give their kids the best and are willing to sacrifice themselves to make that happen.
You only get one chance to sell your business, so it’s crucial to do it right. EO members are fortunate to have a variety of resources to tap into as they prepare for this critical step, including situational mentorship, executive education opportunities and virtual learning events.
If you’re considering selling your company, be sure to allow enough time to prepare thoroughly. This should include steps to get your books in order, conduct a professional business valuation, seek professional legal input, and consult an M&A advisory expert to explore all options on the table.
At the end of the day, when selling your business, it’s never just business. It’s very, very personal.