How to Sell Your Business and Survive the Emotional Rollercoaster
You've put your heart and soul into building your business. Alongside the many triumphs, you've endured years of stress, anxiety and frustrations, not to mention sleepless nights, to create a business you are proud of. Now it's time to make your exit...
With all that hard work behind you, you can look forward to reaping the financial rewards of a successful exit and the lifestyle to match. There's just one final hurdle before you are sipping pina coladas in exotic climes and enjoying the lifestyle you've been promising yourself (and your family) for years.
With the right team, the numerous technical challenges of selling your business are manageable. What is less obvious are the psychological challenges involved.
Whether you are considering putting your business on the market as part of your long-term exit planning or banking on a sale in the short term, the process is often an emotional rollercoaster. Many a sale has been derailed by emotions on one side or the other. Awareness of the emotional challenges is the first step in preparing yourself psychologically, so you can perform well throughout the process.
Even serial entrepreneurs who regularly go through business sales are challenged by the highs and lows of the process. It’s no wonder that many first-time sellers find it overwhelming.
Read on to find out how to sell your business well and mitigate the common psychological challenges at each stage of the process.
The decision to sell
There are many reasons why business owners decide to sell. Sometimes it is a planned (or forced) exit strategy - but often, it’s due to changes in personal circumstances, such as retirement, illness, family pressures, stress, or a desire for a new challenge. The decision represents a significant change in the business owner's commitment to the company. Their sense of purpose begins to shift from growing the business to finding a buyer, managing the sale, and imagining life post-completion.
As a business coach for entrepreneurs, I’ve seen many go through this process with hope and excitement cut through with the repeating patterns of frustration, anxiety, anger, resignation, and even desperation. These unmanaged emotions lead to poor decision-making, add to the complexity of the situation, and could even derail it altogether.
Entrepreneurs have invested time and energy into developing a business that operates in a way that represents their values and becomes a reflection of their identity. Therefore it is not surprising that inner conflicts about relinquishing ownership can be a significant distraction, causing the owner to procrastinate rather than acting decisively.
The key to being decisive is setting out a map of how different life will be after the sale. This is doubly important when the owner is selling because they no longer enjoy the business to ensure they are not leaping out of the pan and into the fire.
ACTION: Here are 3 simple questions to help:
Performance Coach for Entrepreneurs
The sales process: resilience for entrepreneurs during the negotiations
Once potential buyers have been found, initial negotiation is often relatively simple. The starting point is usually guided by industry standards, such as a sector-specific EBITDA multiple, adjusted by prevailing factors such as predicted growth or customer churn rate.
However, as the negotiations intensify and the stakes are raised, egos can take over as each party assesses the other. The emotional patterning of the seller often starts to override logic and good business sense at this stage.
For some, the positive feelings associated with the opportunities post-sale can intensify, causing them to run ahead of themselves, while for others these positive feelings are overshadowed by the stress of the negotiations.
Empathy is your best friend
Dealing positively with differing opinions, conflict, and criticism can make the difference between a smooth sales process or a rough ride. During a sales negotiation, empathy is your best friend as you need to understand the buyer. When we get caught up in our emotions, our understanding of others’ perspectives becomes limited.
Failure to find an agreement means having to start again with a new potential buyer, which takes up valuable time and attention, leading to frustrations and disappointments. As their dream payout and lifestyle slip away so does their motivation. This can lead to a downward spiral in the performance of both the seller and the business, and ultimately its value. Sadly, a crashed sale has led to the demise of more than one business.
The business seller’s resilience, empathy, and ability to maintain their motivation are critical through this phase.
ACTION: Perform a resilience check
Performance Coach for Entrepreneurs
After-sale completion: how to let go
The seller has set up their company because they have the entrepreneurial mindset to make a difference and turn their idea into a commercial success. Their heart is embedded in the business - can they let it go?
From my experience, the challenge of letting go is extraordinary.
It is time to say farewell to the business that now represents their values and principles. They have nurtured it with their financial investment, time, and energy. What happens when it’s no longer a part of life? The rewards of exit spurred them on, but when it is all signed and complete, we come to the bereavement stage. In many ways, it leads to a loss of identity. I’ve even heard one seller go as far as to liken it to a near-death experience.
If a larger company incorporates the business and the seller stays on, there are additional emotional strains. Again it revolves around a loss of identity - a loss of status and autonomy. They will watch their business move in a new direction and may even be expected to be the orchestrator of those changes.
The negative feelings can intensify, leading to potentially damaging behaviours. Many business owners describe the emotional pain as being akin to seeing their children hanging out with a bad crowd and heading down the wrong path. This is pertinent for entrepreneurs as their company becomes their “baby”.
How can we help entrepreneurs deal with the emotions of selling their business?
To recap, the varied emotions of selling your business should not be dismissed and your psychological approach to this huge transformation is paramount. You need support through this highly personal change; from honing your decision-making and building resilience to letting go comfortably and reinventing yourselves with renewed purpose.
There are undeniable complexities in the process. But with the right support and plans in place, your entrepreneurial drive will enable you to carve the future you want. By cultivating the right mindset, the process of selling can be a compelling and even enjoyable experience. But if you do not address these psychological challenges throughout the journey, it will be a stressful and potentially damaging experience.
Is an exit strategy on your agenda?
If you are thinking about selling your business or struggling through the sale, don't self-sabotage or get overwhelmed during the process.
I have opened up a limited number of complimentary strategy calls for business owners, so you can stay in control and thrive through this the critical period and beyond.
ACTION: Get a strategy to stay in control & thrive through your business sale
Performance Coach for Entrepreneurs