A personal exit plan can help you avoid the trap of selling your business before knowing what you will do next.

Selling his rock quarry was the farthest thing from Norm’s mind.

Starting from a dormant, water-filled pit, five rusty conveyors, and no customers, he had built a highly profitable business that was the crown jewel of the five competing quarries on a rich Illinois limestone lode. He enjoyed the hard work, the satisfaction of business success, close friendships with customers and suppliers, a loyal core of managers and laborers, and the pride of making an impact on the local economy.

And then one September day, an M&A broker with whom he was acquainted called with a message that Norm couldn’t ignore.

“I’ve got a company that wants to buy your quarry,” the broker said. “They want to give you X million dollars – half now, half on a five-year note guaranteed by their Fortune 500 parent company. They want to close by the end of the year, and you won’t need to stay on after the sale.

“I think we can get another couple of million out of them, and if you’re interested I can come up tomorrow and bring the listing agreement.”

Norm said he would call him back. Closing his scale-house office door, he took off his hard hat and started to think.

I’m not going to live forever. My blood pressure’s a little high. My son wants to be a sportswriter. My wife wants to spend more time in Arizona. They’re offering a lot of money. Maybe it’s time to sell.

With no more mental preparation than that (not to mention forfeiting valuable opportunities to maximize his price), he decided to move forward. Thanks in part to his broker’s good work, the quarry sold for $4 million more than the original offer, the deal closed on schedule, and Norm and his wife moved to Scottsdale.

The story should have ended happily there, but it did not. Norm may have been willing to sell – but he wasn’t ready to do nothing.

Two years after he sold out, bored and frustrated by a lack of meaningful activity, he came out of retirement to work his entrepreneurial magic on an abandoned granite crushing operation in Colorado. He failed, losing a lifetime’s worth of accumulated wealth, and the only thing that spared him the humiliation of appearing in bankruptcy court was the heart attack that took his life.


Are You Ready To Sell? Answer These 3 Questions

Norm’s sale and its aftermath illustrate what can happen when a business is ready to sell before the owner is.

For would-be sellers, among the many lessons to be learned from this story is the importance of being personally ready for life without business ownership. Achieving that readiness involves having solid answers to at least three key questions:

  1. Why am I selling?
  2. What’s next?
  3. How do I prepare myself for that?

Whatever your motivation – retirement and liquidity are two common objectives – the answers to those questions help you embark on drafting your personal exit plan. And that plan can provide the structure to transition you, financially and emotionally, from business ownership to whatever is next for you.

“Most owners have a strong personal connection to their company,” notes Jim Afinowich. “It’s not just the source of their income and wealth; it may also be a major source of their identity and purpose.

“That’s why timing is so important in a sale. Three stars have to be in alignment: The business has to be ready; the owner needs to be ready; and the market has to be right.”

Gary Papay, our Principal from North Carolina, also is quick to recognize the emotional attachment of many owners to their businesses and understands why that exists.

“Typically, business owners invest not only a considerable amount of time and money into their business,” Gary notes, “but a good bit of themselves as well. However, the fact is that no one will work forever, as retirement or some other form of separation eventually comes for every business owner.”

Exit Plan

In most cases, personal exit plans are necessary to secure a business owner’s financial future. However, as was described in a recent article by the U.S. Chamber of Commerce (“Ready to Move On? How to Create an Exit Plan for Your Business”), many business owners don’t think, or want, to establish an exit plan until they’re ready to leave – if then.

Whether the delay stems from the owner not wanting to confront their mortality, being better at business planning than personal planning, or simply not knowing where to start, procrastination has real consequences.

“Leaving your business can be emotional and overwhelming,” the Chamber article notes,” and planning a proper exit strategy requires diligence in time and care.”

Key Questions

To provide a well-lit path for would-be business sellers in drafting a personal exit strategy, Gary Papay developed a “Financial Independence Quiz” – a simple list of questions that have helped many of our clients overcome their planning inertia and begin preparing themselves for life after business ownership.

Our quiz includes a number of questions that focus on the owner’s personal expectations and needs, including:

  1. Why are you considering selling?
  2. If you received your “ideal” purchase price offer from your “ideal” buyer, would you sell today?
  3. If the answer is no, why not?
  4. How long do you want to stay actively involved in your business? If you reduce your involvement, will that also reduce your desire to own it?
  5. If you sell, are you interested in staying on for a while?
  6. How much do you spend in a typical year to support your style of living?
  7. How much more would you like to spend to support your “ideal” lifestyle?
  8. What do you think your business is worth on the market?
  9. If you received that amount for your business today and combined the proceeds with your other income-producing assets, would you have enough to comfortably support your ideal lifestyle indefinitely?
  10. Can you survive emotionally without your business?
  11. Can you envision a meaningful and personally fulfilling life if you no longer own your own business?
  12. Can you name three to five significant, ongoing activities or interests that you would pursue after the sale?
  13. Have you had meaningful discussions with your spouse about an exit from your business?
  14. Do you have a departure date in mind?

A New Season

In reflecting on our 1,100-plus successful closings and examining his pending deals, IBG co-founder and Tulsa Principal John Johnson says that there is a defining point in most transactions – an ah-ha moment – at which the selling owner comes to grips with the positive realities of transitioning to their new season of life.

“Once an owner works through the emotional and identity issues of business ownership,” John Johnson observes, “they begin to recognize that selling is their key to seizing new control, over time, attention and energy – perhaps en route to new opportunities and a life of fulfillment that is free of the consuming constraints of ownership.”

Helping business owners achieve freedom as a reward for their years of successful ownership is a key part of our mission. Whether or not your company is ready for sale, you can look to our experienced M&A advisors to guide you through a valuable, no-obligation process of exit-planning your life to follow a successful sale of your business.


If you have questions about succession or selling your business, feel free to book a call with any of our senior Principals.

*This article originally appeared on IBG Foxfin site.


Phoenix-based M&A advisor Jim Afinowich is a Certified Business Intermediary, M&A Master Intermediary and Business Brokerage Specialist who has managed and supervised more than 500 transaction...

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