NEXT CHAPTER
The 8 Family Business Transition Options – Which Will You Choose?
According to a survey conducted by the Exit Planning Institute, a staggering 75% of privately-held business owners regret selling or transitioning out of their business within 12 months of the transaction.
How is it possible that owners are so disappointed just one year after what should be the happiest day of their life? There is a disconnect between their head and their heart.
Most business owners are analytical and driven by data and results. But, when it comes to matters of the heart, they typically (not always) blow it off and think ‘that will take care of itself.’ But it doesn’t.
Thinking through the Business Transition
Business owners must consider the practical and emotional factors that can lead to disappointment after an exit. It is very different to go from a life of:
- Managing by objectives with nearly every minute accounted for…to not knowing what to do for the day.
- Deciding that you are ready to move on…to staying on because you can’t find your successor.
- Having your phone ringing constantly…to suddenly no calls.
- Having your closest connections revolve around work…to suddenly losing daily interaction with that social circle.
- Being the “buck stops here” person…to no longer being in control.
- Barely seeing your spouse…to spending 2X or more time with them.
- Assuming the business will provide money when you need it…to questioning if you received enough money in the transition to fund the lifestyle you want.
I promise you that golfing every day is not going to fulfill you. It might be a part of your new routine, but finding and designing your Next Chapter is critical to your business transition success.
How can you tell if you are ready to enjoy this next phase or destined for doubt?
PREScore is an assessment business owners complete to evaluate their preparedness to transition to a new role within the company or completely out of the business – and to do so with no regrets. As I mention in my video, PREScore also highlights unseen factors that could lead to regret if left unaddressed. If you are a business owner, take the assessment – it’s an invaluable tool to help you start developing your transition roadmap.
I advise owners to be careful not to get locked into only one path without considering all the other options. Getting this right is a critical part of post-transition satisfaction. Think about what will be best for you, your family, your employees, and your community.
Which transition path will you choose?
There are 8 transition paths you could take:
- Sell or gift to your family
- Management buy-in or buy-out
- Sell to other shareholders
- ESOP (Employee Stock Option Plan)
- Sell to a 3rd Party
- Sell to Private Equity
- IPO (Initial Public Offering)
- Liquidation
Stop to compare the first option to the last option. How does that feel? They are at opposite ends of the transition spectrum. The first can be a source of pride and accomplishment while the latter can feel like disappointment and defeat.
There is one more key factor in successfully transitioning your business. It is figuring out what you are transitioning to vs transitioning from. This subtle mind shift is an important part of transitioning without regret.
Most business owners, if they are in relatively good health and begin their Next Chapter in their 60s, have nearly a third of their life still in front of them. Don’t wing this! Transition success is achieved by aligning your head with your heart.
Start thinking about your post-transition life NOW while you still have 3-5 years of runway to design a plan. It WILL be the difference to achieving those things that are fulfilling and important to you and your legacy.
If you want to discuss the 8 options or your PREScore results, Contact Us or connect with me on LinkedIn.
