CEO/Owners are wired to build, not exit. The very strengths that make them successful are the characteristics that hinder their ability to exit successfully. Finishing Big and becoming part of the Elite 7% means achieving the exit you want, with the terms and timing you want, and transitioning to a life of satisfaction and significance.
The reality is that most owners fall victim to the paradox of success and fail to maximize their most significant resource for achieving a competitive advantage for exit - time. Exit is a journey that is measured in years not months. Owners that do invest the time and effort in the exploratory process not only realize significant gains in the strategic and execution phases but, they are more likely to be found among the Elite 7% in the transition phase.
What do owners need to know?
They are “wired” differently. From the moment an entrepreneur begins their business or takes over an existing firm they are putting their reputation, career, financial security, relationships, and identity on the line. Challenges come and go as a natural course of growing a business. As each new challenge is conquered the entrepreneurial characteristics necessary to build resilience required for long-term success grow. With each new level of success, the entrepreneur’s self-identity is shaped by their experience, and their role-identity (“owner”) is etched just a little bit deeper into their inner being.
As the business grows, the symbiosis between owner and entity grows. CEO-owners experience forces that shape their identity in ways others will never know.
Many CEO-owners have a secret and seductive fantasy that they can own and operate their business for as long as they desire and they will be able to exit in their own timing and on their own terms. However, research tells us that one of the greatest challenges middle market owners face is that 70 – 80% of their businesses fail to sell.
One of the most consistent themes about why deals never get to market or fall out during the transaction is that owners are poorly prepared for the psychological experience. Kets de Vries of INSEAD and author of several books including “Family Business on the Couch” points to this fact when he says, “Investment bankers, people acquiring entrepreneurial businesses, or individuals who work for an entrepreneur — anyone who deals with an entrepreneur — would do well to heed the complex drama playing in the inner world of these people; they will profit by looking beyond the surface of things.”
As it turns out, beyond the surface of things is tremendously important. Not just for stakeholders, but for the owners themselves. A study by PwC revealed that nearly ¾’s of the owners profoundly regretted their exit within 12-months. Finishing Big and exiting on top is not just about getting the best terms, maximum value, or even completing a transaction. It is about living a life of significance and satisfaction after the exit and owners are best prepared by doing the hard exploratory work years before they plan to transition.
What are the most common challenges owners have to overcome in the exploratory process?
1. Identity: The owner’s identity can get fused with their role identity and answering the question, “who am I if not my business?” becomes difficult.
2. Personality: Strengths that made them successful in business may become weaknesses for exit.
3. Motivations: Addressing psychological needs that must be satiated for healthy functioning, but are met primarily through their role as owner.
4. Success: Tackling the paradox of success that results in blind spots and limitations impeding the owner’s ability to achieve greater levels of success, particularly in the area of exit.
5. Resilience: Is essential for persevering through the difficulties, but can lead to the development of psychological castles that prevent owners from having to explore cognitive and emotional dimensions of their inner world.
6. Goals: Establishing a vision for exit and defining goals for MOM (Money, Ownership & Management).
By increasing your awareness, you have already taken another step on the journey to becoming part of the Elite 7%. Exploration is neither quick nor simple, but we help by translating experience and academic research into actionable insights that give owners a competitive advantage for successfully navigating their exit journey. Visit www.planfortransition.com/harvard for a few easy steps to keep you moving forward:
1. Download the Power of Exploration whitepaper
2. Take our research based 15-minute online assessment designed with busy business owners in mind to discover your transition readiness.
3. Read “Finish Big: How Great Entrepreneurs Exit Their Companies on Top” by Bo Burlingham
4. Contact us for a free initial consultation.