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I Want to Stay Forever: Why Business Owners Hesitate to Leave

Exit Planning relies on one basic and important premise: allowing owners to leave their businesses with the financial security they and their families need in their post-exit lives while fulfilling all of their other Exit Objectives. If the Exit Plan fails to do this, it is no Exit Plan at all. Given this goal, why wouldn’t owners want to leave their businesses once their Exit Plan is set? This post will examine two of the most common reasons why owners stay, even when their Exit Plans are appropriately constructed.

Reason 1: The Return Outweighs the Risk

Business owners and their stakeholders (spouses, advisors, co-owners, etc.) embrace this reason most easily because it often is based on tangible evidence. For example, some owners have done one or more of the following when determining whether to exit:

  • Observed the volatility of the stock market.
  • Learned hard, hands-on lessons from the 2008 market crash.
  • Realized the low yield of U.S. 10-year bonds, a typically low-risk investment.

Given these observations, owners often justifiably conclude that the returns they receive from their businesses by staying in it vastly outweigh what they could earn from other sources, including both stock and bond markets.

Reason 2: They Love What They Do

Some owners stay in their businesses because they sincerely love running them, and not doing so would strip them of a portion of their identity. Even when owners have an ironclad Exit Plan and have accomplished every goal they set forth and more, some simply cannot let go of their businesses.

Owners’ love for their businesses is a sensitive topic that advisors constantly confront. However, the choice to exit a business is the sole responsibility of the owner. As Exit Planning Advisors, we cannot and should not urge a business owner to exit before he or she is ready. Consider the following example of an owner who was pushed (however lightly) into exiting his business before he was ready, as recounted by a BEI Member.

I Just Can’t Do It: Balking at an Exit

During our annual year-end planning meeting, one of my clients, Barry (pseudonym), mentioned that buyers were approaching him every month about his business. Barry’s family had been looking forward to him selling the business so they could take time to be a family again. He and I had already started improving and installing the company’s Value Drivers and documented the value of the company, but Barry wanted to start building a marketing strategy to sell the company. He also wanted to start interviewing transaction intermediaries to orchestrate the sale.

Within six months, we had put the company on the market, and several buyers had submitted offers well in excess of my client’s financial security goal of $4 million. This kicked off a bidding war. The buyers pushed their bids from $4 million all the way up to $11 million.

As the bids increased, Barry disappeared. I don’t mean he stopped returning phone calls or responding to e-mails. He literally disappeared: No one—friends, family, or colleagues—could locate him for days.

I was horribly worried about Barry’s welfare and, to a slightly lesser extent, how long the $11 million offer would stay on the table. Fortunately, after a few days, Barry walked into my office, a bit worn but well. After expressing my relief that he was alive, I warned him that he was dangerously close to ruining the deal of a lifetime. Barry’s response stunned me: “I just can’t do it. Call off the deal. I don’t know what I’d do with myself if I didn’t have my company.” I called Barry’s investment banker and had him withdraw from the transaction.

Lessons from Barry: It’s Okay to Stay, Just Do It Right

As Exit Planning Advisors, we must remember one critical rule: When our clients waver between staying and exiting, especially if they love what they are doing, it is not the right time for us to encourage them to exit their businesses.

Barry’s scenario is a common example of an owner being pushed to leave (by his family) before he was ready. Even though the business was ripe for sale, Barry’s inability to let go, compounded by the unwanted pressure to exit, cost him both financially and emotionally: He lost tens of thousands of dollars in fees and productivity, and his family was devastated that he would not sell.

Not encouraging business owners to leave before they are ready is much different from not encouraging them to begin planning for their inevitable exit. Even if our clients aren’t ready to exit, Exit Planning Advisors can still map out the benefits of beginning the Exit Planning Process years before a foreseeable exit. Most importantly, Exit Planning Advisors can help owners understand that they can stay active within the business (and thus build its value) while considering other, non-business activities to fulfill them once they finally do exit.

Exiting Properly: Pedro’s Passion

Consider an alternative scenario: What if Barry had found a passion outside of his business, like another one of our clients, Pedro (pseudonym)?

Pedro had owned a family automotive shop for 25 years. He was willing to transfer the business to his two business-active children but flatly refused to work any fewer than 60 hours per week. This presented two obstacles for Pedro:

  • Creating transferable value (i.e., making the business less dependent on Pedro).
  • Keeping Pedro’s children committed to and invested in the business.

While talking with Pedro, his Exit Planning Advisor, Doug (pseudonym), mentioned his interest in building model cars. Pedro took out his wallet and showed Doug five photos of models cars he carried with him. “I always loved building model cars, but fixing the real ones paid better.” Doug gave Pedro information about a competitive model car–building group, and within a year, Pedro began ranking within the top 50 model builders in his state. His newfound passion encouraged him to exit his business and pursue new goals.

This is a classic example of a business owner exiting his business only after finding a new, non-business passion and running with it. It’s also a good example of what makes a strong Exit Planning Advisor. Because Doug was an Exit Planning Advisor committed to working with Pedro to help him accomplish his Exit Objectives, rather than simply a financial advisor working for Pedro, he was able to relate to Pedro personally and help him find his new passion.

Exiting a business is the most significant financial event a business owner will experience in his or her business life. Though owners are the only ones who can decide when to exit, as Exit Planning Advisors, we can help them traverse the path by testing their assumptions, asking important questions, and providing information.


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