For most entrepreneurs, selling a company is the ultimate goal.
Often it’s a nice payday and a great opportunity to relax, catch your breath and re-focus your life on some new priorities. When I sold my business I took a trip around the world.
But for some people, the selling a company can be a complete let down.
I’ve had “Seller’s Remorse” more than once. Maybe you have too. As happy as I was to exit the business I had built, I still — years later — think about all the opportunity I left behind.
Some guys I know act on that impulse and go so far s to buy back the company they sold. I’d like to think they are making a smart move, but sometimes it’s just a bad case of a terrible disease called “Seller’s Remorse”.
If you think you might be suffering from this common syndrome, here are the warning signs to check out:
Warning Sign #1: Too Much Passion Passion for your work is healthy when the company is yours. If someone else now owns it, be careful not to let your emotions dictate your actions. If your reasons for buying back your company are based more on emotion than economics, you may be better off to start over from scratch. I spoke with Ben Emmons, VP of Sun Capital in Boca Raton, Florida about this. “Buyers need to get an advisor – a party in the middle that does not have an emotional attachment,” he told me. “You need someone who can focus on getting the deal done.
” Warning Sign #2: Overconfidence Because you built the company once, there’s no doubt that you can do it again, right? Wrong. In fact, rebuilding a company can be much more difficult. When negotiating a buy-back price, be careful to calculate valuation based on current conditions and not pie-in-the-sky forecasts. “Entrepreneurs will often pay a lot more than they have to because they believe that the business can grow more,” advises Emmons. But if you are already involved in negotiations for the company, chances are the seller wants out. You may have more leverage than you think; drive a hard bargain.
Warning Sign #3: Hero Syndrome You may think of yourself as the knight in shining armor who is charging in to save the day. Don’t count on employees to join you in that fantasy. In fact, employees may see the pending transaction as a further disruption, and they may worry about the future. “A buyer may have to earn back the respect and loyalty of the employees,” says Emmons. “Re-purchasing the company may rekindle the same angst that the employees had when they heard that you were selling.”
Prescription: Take a Chill Pill If you find you’re suffering from any of these symptoms, take a step back. Get an advisor or partner involved in the evaluation, negotiation and planning. Meet with insiders to be sure there is room for you on the new team.
And be honest with yourself… why is it that you really want to re-purchase THIS company? Why not start over with a new team and do things just a bit differently.
The best advice: Celebrate the sale of your company … then take your marbles and go play somewhere else!
[More on this topic in my article about “What’s Up Interactive” founder Richard Warner.]
Dedicated to your (exit strategy) profits,