When you sell your business, there’s an important difference between the transaction and the transition. Yes, the market needs to be receptive to the sale—and your business needs to be prepared. But you need to be personally ready for the transition as well.
Typically, business owners primarily focus their transition planning through a transactional lens: the financial capital the sale will generate. But all too often, those same business owners later regret not spending more time on personal planning earlier in the process.
Many owners don’t know what they want to do after the transition. They tend to overlook the personal fulfillment that the business provided—qualities such as daily structure, purpose, and motivation, or feeling connected to others and experiencing the camaraderie of a team.
“Their planning focus is really on the business, not themselves, and not the impact that the transaction is going to have on them,” says Russell Sanders, managing director of Truist’s Business Transition Advisory Group. “The question then becomes, ‘How do we get owners to begin to think about this?’”
A critical first step
Sanders suggests thinking about how your brain examines information. In short, there’s automatic processing (or fast thinking) and more intentional calculating and planning functions that require extra effort (slow thinking).1Fast thinking is our go-to method.
“You can’t change that,” Sanders says. “But what you can do is acknowledge that when you’re about to make an important decision, you need to force slow thinking to engage. For a business transaction, it’s a very important decision to stop and do research, to make sure that you’re focusing on all of the things that you need to be focusing on.”
That means spending time exploring your options and strategizing about your alternatives before engaging in a transaction. Here’s a road map to get you started:
1. Define your purpose and priorities
Appreciate all the intangibles your business provides. (See “Personal fulﬁllment” below)
- How will you replace the purpose, community, and structure that the business provided?
- What pursuits would make you genuinely happy?
2. Understand your alternatives
Explore what’s motivating you and investigate viable alternatives for yourself and the business.
- What’s left for you to achieve?
- What’s the best way for you to exit the business?
3. Focus on your preparations
Review financial planning objectives and estate planning goals to ensure existing plans will accomplish what you want them to accomplish. Learn how other successful families have transitioned—and determine what makes sense for your family.
- How can your money move you toward your goals?
- How will the deal’s structure impact what you have to invest?
After a business transaction, you don’t want to be thinking, “What do I do now?” These are a few of the often-overlooked personal accomplishments that are achieved through your business:
- Connectedness to others
- Daily structure, purpose, and motivation
- Camaraderie of a focused team
- An expression of your values and goals
- The means to positively impact the lives of others
- Financial control and security
“We all do things for a reason—because they make us happy,” Sanders says. “And if we don’t do this after getting out of the business, what’s going to make us happy tomorrow? How are we going to replace these things?”
Considering you in your business transition takes time.
Work with the Truist Business Transition Advisory Group to develop a multidisciplinary approach to meeting these new challenges.