It’s a major adjustment to give up the control and profile that comes with being the founder of the business and even life-changing wealth can be an anti-climax. The shift to your business meaning less to you and you meaning less to it requires psychological and emotional preparation. For those with a clear intention to sell their business, it’s important to look beyond the financial planning to the life choices and future career you want.
Speaking at a recent The Supper Club event, Martyn Dawes, the founder Coffee Nation who sold the business to Whitbread for £24m, said: “Nothing prepares you for leaving your business and losing that power base. It’s like climbing a mountain, reaching the summit, finding nothing, and having to come back down.”
Lara Morgan, who built the global brand licensing business Pacific Direct over 17 years before selling a majority shareholding for £20m in 2008, couldn’t agree more. “It’s too easy to neglect health and wealth when focusing on growth or hitting a target,” she said, sharing her experiences immediately after selling. “I had this list of stuff to do – like getting my teeth checked, my eyes checked – stuff everyone does but I’d ignored for so long. And surprisingly, managing my new wealth was a challenge in itself.”
Having applied yourself for many years to one project, the void left after selling a business can be hard to fill. Do not underestimate how your life will change if you walk away completely. After going at 100mph for years, you may feel some guilt at doing nothing. You may feel the need to find something new to get you out of bed in the morning. A successful exit will give you options but give yourself time to choose the right ones. It’s almost impossible to keep the amount you sell for quiet as news will circulate amongst professional and social circles. Speaking to a wealth manager early in the process will help you prepare for this with some wealth planning strategies.
A wealth manager can help business owners calculate how much they need to fund their lifestyle aspirations, but founders need to consider their new purpose. “There is an identity associated with founding and running a business; losing that could lead to a vacuum that needs to be filled”, advised Rob Douglas, relationship manager at RBC Wealth Management.
The most common advice from our members who have sold their companies is to take some time out to consider what is important to them. Travelling and generally recuperating is vital to help you re-calibrate and adjust to a new life. Some members have opted to take courses or attend conferences to learn more as they explore new avenues and find new passions. Write lists of what you want to do and achieve. It could be building up another company, being with family or working with a charity. It’s useful to do this before you sell so you have a good story for why you are selling the business and you have something to look forward to.
Members of The Supper Club like Dawes and Morgan who have successfully exited their businesses for large sums have built different portfolio careers. Lara Morgan wrote the Amazon best seller More balls than most, shares her experiences as a public speaker and recently founded, Scentered, a new venture.
To maintain the drive and momentum they once had, some members have made the mistake of taking on too many projects. “Working on lots of different things can be quite hard work and sometimes less fulfilling than building something,” said Martin Spiller, who built Only 4 U to £15m in five years before selling. “Being in groups like The Supper Club and sharing experiences, both good and bad, is extremely helpful and I make sure that each year I review what has gone well, what hasn’t, and what I can do more of next year.”
Some members have become chairmen and non-execs to support other high potential entrepreneurs, but the transition from founder to adviser can be challenging.
“When you run your own business, you’re very focused on that one thing but now I have to run in 6 or 7 directions, which is mentally hard to deal with,” says Zack Feather, who rapidly scaled Asclepius Global to £62m in seven years before selling to Blackstone. He has since become a non-exec for several businesses to help them learn from his experiences. “Culturally, you’re the most senior person in the business; but it’s not yours so you have to keep some distance.”
For anyone considering a sale or exit from their business, we always recommend talking to different founders who have been through the process to learn from their experiences and find the option that suits them most.