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What to Expect When You Sell Your Company and Walk Away

As co-founder and retired CEO of CareerTrack, I know what it means to sell your company and walk away. Jeff Salzman and I built CareerTrack into an international management and development company. We offered training programs on leadership and communication in 600 markets, 24 countries and four continents. When we sold the business in 1995, we had 700 employees and were doing 82 million in volume.

Over two decades later, I am still confident in my decision to exit. If you ask me about it, I will tell you that I’m a strong believer in selling. If you’re sitting on the fence, I would tell you to take the money and move on. And then, afterward, stand on the sidelines for a while so you can contemplate the options for your life after exit. There are plenty of options available to you if you take the time to make an informed and rational decision about selling your company.

Should I Sell? Six Reasons I Sold My Company

Everyone has different reasons for wanting to sell, and it’s important that you have these sorted out before you bring your business to market. Here are the main six reasons I sold my company.

1. I wanted the money.

I am not going to pretend this wasn’t the most significant factor. I had an opportunity to sell before, but hesitated, and the deal fell through. After that, I knew I was ready because I wanted the money. My wealth was tied up in CareerTrack – a wealth prison where 70-80 percent of my net worth lived. I wanted to release it.

2. I was nervous about the future.

When I decided I was truly ready to sell, I was at a point where I found myself losing confidence in my industry and the outlook for my company. We had plateaued at $60M for a few years, then again at $80M for a few years. I knew we could get to $100M but after that, I didn’t know how we were going to grow. I found myself feeling more afraid about what was around the corner than excited about the future potential of the business.

3. My partner was ready to retire.

When CareerTrack was worth $20 million, my business partner, Jeff, told me it was enough for him. He was happy to take his 35 percent and leave. I kept pushing him to stick around another year, then another, so I lived on borrowed time for about five years.

I pushed him beyond his “get out” time, and if I am honest, the reason was because I lacked the confidence to carry on without his talent and daily involvement. He was a secret weapon at CareerTrack, and I also didn’t think it would be as fun or as interesting to go solo. Since we started the company together, I decided we should end it together too, making a dual grand exit.

4. I wanted to reclaim my life.

In building the business, I was working 70-90 hours per week for fifteen years. I’d get six hours of sleep and wake up exhausted in the morning and by evening’s time I was brain dead. I was burnt out, and the business was an addiction that I couldn’t control. My motto used to be, “Keep up with the competition Monday through Friday; pass them on the weekend.” But no matter how much I worked, I couldn’t get it all done. The business got every part of me, and I was ready to sell so I could reclaim my life.

5. I needed to join my family

At the time of the sale, I was two years into marriage and had a one-year-old son. I struggled to find the delicate balance between career and family, and I knew I never would find that balance because for me, it was always one or the other. I had started a family, and I wanted to exit my business so I could join it.

6. I wanted to do other things in my life.

I didn’t want to work in the business all my life, to be doing the same thing at 70 as I was at 35. Fewer areas of the company were holding my interest and attention. I was tired of not getting to the books, hobbies, sports, and travel destinations that I wanted to experience and explore. I was tired of living my life on “someday” as in “someday I’ll do this; someday I’ll do that.”

These reasons can serve as a stepping stone for thinking about your own exit. What are your reasons? Consider them. Contemplate them. Crystalize them. It’s really essential to understand that your motives are sound, and that they’ll stand the test of time before your pull the trigger.

Post-Sale Reflection

I’ve had twenty years to reflect on my reasons for exiting and the exit process as a whole. When you exit, you will do the same. As I think about the series of events that occurred before, during and after the exit, I have no second thoughts or flat out regrets. That’s not to say everything went perfectly. I got some things right and some things wrong.

What Went Right

  • Dress Rehearsal for Retirement - Before I made the decision to exit, I took a 90 day sabbatical to get a sneak preview of what my life would be like without the company. I read fiction. I traveled. I reconnected with family and friends. It shocked me that I had no trouble filling my days.
  • Staying Ready – We had been talking about selling since 1987. We told ourselves that when the right deal was presented, we would accept it. That made us perpetually ready for a sale and prepared for when it did happen.
  • Holding Out for the Right Price – We knew the number we wanted and would not settle for less. We were firm against buyers offering a lower price than we wanted. This firmness made them increase their offers to accommodate our demands.
  • Experienced Advisors – During the process, I also turned to old pros to help with the deal: an eminent, local attorney who had done 80 deals in Colorado, and a table negotiator who had been involved in over 200 deals. These professionals helped me get more money from the sale. I advise all business owners who are thinking about exiting to assemble a ‘deal swat team’ before they take the company to market.
  • Preparing Myself Mentally – I prepared myself mentally for how the deal may go – if it went through or if it flopped. I was prepared to hand over the keys and not look back, and I made a bucket list of things I would do after closing. I also prepared myself just in case the deal unraveled.

What Went Wrong

  • Not Hiring a CPA – We relied on our house accounting team instead of hiring a CPA to scrutinize the selling document. We ended up in a half a million dollar sales clash with the buyer over legal language. We won but had to pay fees, and it also damaged our relationship with the buyer.
  • Being Unaware of Tax Saving Options – I was focused on getting the deal done but if I did the research and worked with a financial advisor, I potentially could have put more money in my pocket.
  • Falling Prey to Post-Sale Buyer Antics – The buyer tried to lower the purchase price 18 months after closing the deal. They tried to cheat Jeff and me out of $12 million, a third of the purchase price, over a $10K issue. We ended up getting a summary judgment and won. But I was blinded because I didn’t expect a bad faith move, wasn’t skeptical enough and didn’t ask the tough questions upfront.

Protecting Your Money after the Sale

After the sale, you must focus on protecting your money. Unfortunately, many business owners make mistakes after exiting that cost them their money and their legacy. Here are a couple anecdotes about people I know (but who will remain anonymous):

  • One business owner lost $6 million (20 percent of his net takeaway) just 18 months after selling the company. He was too eager to invest and too willing to trust the wrong financial advisors.
  • Another business owner sold his company and went from $35 million to zero in 15 years. He made angel investments that didn’t pan out, experienced some bad timing on real estate projects, and overspent his hard earned money.

You may look at these stories and say, “This won’t happen to me.” But I know firsthand that even if you are careful with your money and aren’t trying to take big risks, you still can make mistakes. Within five years I lost $3 million of my proceeds. Here is my advice:

  • Don’t try to double your money. It won’t change your life, and you just might lose everything.
  • When you look at risk, make sure to see the potential losses, not just the potential gains.
  • Don’t leave it to the experts. I hired four different financial advisory firms to manage my net worth, and none of them panned out.

Regarding that final point, I remember losing $700 thousand in one week and realized that I could do it myself; I didn’t have to pay someone six figures to lose that kind of money.

After exiting your business, I advocate being smart with the money that you have worked so hard to earn. For the past five years, I have been a very active investor. Investing prowess is a valuable skill to acquire after you exit your business, and it will make you a responsible custodian of your sale proceeds.