May 28, 2020
Firstly, when to step down is completely up to you.
There will be dozens of factors to take into consideration, ranging from how you feel about walking away and the potential value and salability of your company to the company’s future sustainability.
But, whatever your situation, at some stage, you will need to ask yourself: “Is my long-term goal selling the business at some point, or will I stay until they wheel me out in a box?” and “Do I want someone in my family to take over the business?”
Be honest. Do you from time to time ask yourself, “Geez, is it time to sell? I wonder what I might get for the company”? If you do, that’s completely fine, but that also means you should do some strategic planning.
One thing I can guarantee is that it’s never too early to start thinking about your exit strategy. I’ll admit it: I didn’t have an exit strategy from day one of Paychex. But I learned the necessity of planning for the day you want to step aside. Or have to.
If you start to seriously consider selling your business, be very careful about making any long-term commitments such as real estate leases or the purchase of equipment. These can get in the way of a successful sale. New owners may not agree with the commitments, or they may obstruct the direction in which the new owner may want to take the company.
As far as employees are concerned, it’s best they are not aware of your intention to sell the company until much later in the sale process. It is natural for people to be apprehensive about the future of their jobs, and some may start seeking alternative employment. Although their fears may be understandable, they are often unfounded.
Plus, most acquirers will want key employees and senior management to remain under the new management; they may even offer incentive contracts to those people they see as integral to the company’s well-being.
A final point that I think is important to make is, if you do sell, the acquirer will likely request that you stay on for anywhere from six months to five years until they get well adjusted to their acquisition. In many cases, owners agree to this and then later have issues with the new owners and leave anyway.
This can lead to a “so sue me” situation, which can be unpleasant for all parties. This is another reason to plan your exit from the business well in advance. If you leave too late, those “extra” few years can seem very long, especially if you were planning to buy a boat and sail off into the sunset. I, therefore, urge you to think ahead.
Whatever course of action you decide to take, the biggest advice I can give you is once you have decided to sell the company and you have settled on a price and the terms of the sale, don’t spend any more time thinking about it—don’t look back. Enjoy what you’ve got; don’t continually chew on it, or it’ll drive you crazy.
Of course, if you need any further insight on developing an exit strategy, or when to implement it, check out my book Built, Not Born: A Self-Made Billionaire’s No-Nonsense Guide for Entrepreneurs.
Originally published on Quora.
A Self-Made Billionaire’s No-Nonsense Guide for Entrepreneurs.
Paychex Founder, Tom Golisano shares the hard-won lessons from his entrepreneurship journey in Built Not Born, a guide to growing a company to any size by going against the grain like he did.
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