Your Next Adventure: Planning for Life After the Sale of Your Business

By Marshall Rowe, Jim Fitts and John Weeks

Every good business owner has an operational plan—but only 17% create a fully articulated transition strategy. Even then, the focus is usually on monetary and legal concerns, ignoring the important emotional and lifestyle effects of the change. To take on your transition happily, successfully, and securely, you need a holistic plan that incorporates personal, family, and financial concerns.

In Your Next Adventure, the team from Harvest Capital shows you how to craft a robust transition strategy that considers your business, personal, familial, and community needs. From pre-sale to post-sale, Rowe, Fitts, and Weeks will help you plan ahead, assemble the right professional advisors, and incorporate your values, legacy, and loved ones into every choice you make.

It's never too early to start thinking about your next venture. Your Next Adventure will prepare you for a future filled with potential, purpose, and satisfaction for you
and those you care about.

• Language: English
• Publisher: BookBaby
• Release date: Apr 29, 2019
• ISBN: 9781544502137

Book preview

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Copyright © 2019 Marshall Rowe, Jim Fitts, and John Weeks

All rights reserved.

ISBN: 978-1-5445-0213-7

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We dedicate this book to our clients and their advisors, who have shared with us their successes and failures so others can learn from their journey.

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Contents

Foreword

Introduction

1. An End…and a Beginning

2. The Impact on You

3. The Impact on Your Spouse or Partner

4. The Impact on Your Family

5. Engaging Your Family for the Future

6. Wealth Education

7. Other Stakeholders

8. Assembling Your Transition Team

9. From Running an Operating Company to a Financial Company

10. Discovering Your Life Balance

11. Building a Legacy

12. Pulling It All Together

Acknowledgments

Resources and Recommended Reading

About the Authors

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Foreword

The Adventures of an Entrepreneur

Ask any entrepreneur about their business, and almost invariably they’ll answer using terms like journey, mission, vision, success, challenges, sacrifices, and goals. If one of them took some meaningful time out of their frenetic schedule to describe the full history of their business, you just might hear the story of one or more brave heroes who embarked on a difficult but noble quest, faced great challenges, made allies and overcame enemies along the way, lost hope, found hope, and continued to push forward, even in the face of the greatest adversities. You see, to an entrepreneur, owning a business is not just a way of making a living or even building a legacy for future generations. To an entrepreneur, owning a business is an adventure.

The classic entrepreneur—if it can be said that there is such a thing—can never be satisfied with the more straightforward role of being an employee who has clearly defined duties and responsibilities. To the entrepreneur, this state of relative certainty is unnatural. Nor can the entrepreneur be fully satisfied with the prospects of lesser rewards in exchange for reduced risk-taking. No, the classic entrepreneur is a willing protagonist who lives for adventure and understands that, on any day, their business can achieve fantastic success or heartbreaking failure. To a true entrepreneur, whatever the result, it’ll all be worth it in the end.

Yet, is there ever really such an end—a happy (or tragic) conclusion to the adventure? Well, for many entrepreneurs, the answer is a resounding no. For them, their lives have become so intertwined with their businesses (in a sense, their alter-egos) that their respective adventures will end only when the entrepreneur or business can no longer continue the journey.

Many others, however, ultimately can and will decide to channel their passions elsewhere by deciding to sell their business and begin their next adventure. In many respects, this new course may be even more difficult than remaining on their current path. These bold adventurers must first envision and then prepare for a very different, new future—one with a new set of challenges and rewards. And they must do so while still living out their prior adventure.

Just think about it. Well in advance of any ultimate sale, an entrepreneur who decides to sell a business must think about how best to do so from an economic, legal, tax, and estate planning perspective—but, while these are the things that are most likely to get the entrepreneur’s attention, they are only the tip of the proverbial iceberg. The entrepreneur must think more globally about the impact of a sale on their self, their family, the business, and all the many other stakeholders in the business.

Simultaneously, the entrepreneur must think about their post-sale future. They must find a meaningful, new quest and thoughtfully and diligently prepare for it—their life’s next adventure. This book provides the entrepreneur and their family with a clear roadmap to navigate this uncharted territory with purpose and success.

The co-authors approached this book from a unique perspective, having experienced transitions in their own careers, while also walking beside myriad business owners during their unique transitions. Their insights are reflected not only in the rich text that follows but also in the provocative and refreshing question prompts at the end of each chapter.

Dream big about the future. Every one of life’s transitions is the beginning of something new.

Michael J. Nathanson, JD, LLM

Chairman and Chief Executive Officer

The Colony Group

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Introduction

Life is like riding a bike—to keep your balance you must keep moving.

—Albert Einstein

When you think about selling your business, what are the first thoughts that come to mind? Perhaps this transition is still years ahead of you, but take a moment and picture the process. You likely begin by thinking through the business-related matters, such as who will buy your company, how to determine its value, and what you need to do to get your business ready for the sale. From there, do you think about what help you will need to prepare? Or the financial and technical aspects of how a sale works? As you’re going over the planning needs, the negotiations, the legal matters, and the tax issues, the list of what needs to be done and whom to involve grows and becomes more detailed.

How deep into your thoughts did you go before you stopped thinking about the business transaction and started thinking about your personal transition? Maybe you reflected on all the time you’ve spent building your company, the pride you’ve poured into it, the growth and value it’s accumulated. What will you do after the sale?

There’s a significant part of your life still in the future. For many business owners, life after the sale of their business can be personally challenging and somewhat intimidating, but it shouldn’t be. There’s a myriad of opportunities for new growth, purpose, and even new adventures for you and for your family.

Your Goals

Transition advisors generally have different suggestions for the best time to begin exit planning, suggesting anything from ten years before the expected sale of the business to as soon as the company launches. In practice, most business owners don’t recognize the need to address their personal transition until after the sale transaction is complete. Occasionally, we receive a call on a Tuesday for directions on how to wire proceeds for a closing on Friday. At this point, there’s simply no time to do personal planning. It’s set aside until after the transaction is complete.

Business owners can easily find themselves in an unexpected position:

They end up being spit out at the end of a transaction with a big bank account, knowing a lot more about process, but trying to learn afresh, What am I interested in doing? What do I want to do professionally and personally—what am I going to do with my time? Most people think of it as a transaction, as opposed to a transition. (corporate attorney, interview)

While the monetary considerations of the sale are important, you also need to address those areas that are most often neglected: the impact on you, your spouse, your children, your employees, your company’s stakeholders, and your community. You need to prepare for the future based on your own post-sale objectives.

A Special Breed

Entrepreneurs are a unique breed of investors, holding a level of comfort with risk and uncertainty that most wouldn’t accept. You handle problems on a daily basis, resolving issues with distribution, sales, employees, and vendor relationships. You’re constantly aware of the competition, looking for ways to bring an advantage to your company and your customers. You’re confident in your ability to strengthen and grow your business.

With so much of your time and effort going toward the success of your business, who’s watching over the personal aspects of your life?

Our purpose with this book is to ready you for life after transition so you’re well prepared and so you and your family can examine the bigger picture with a calm and strategic mindset. We’ll address questions about lifestyle change, family life dynamics, social structure subtleties, your company’s future, and your employees’ welfare. The contents of this book will help (a) supply you with the resources and space you need to keep the focus on yourself and your family; (b) make sure you can fully articulate your personal values, understand them, and keep them in context during the transaction; and above all, (c) open the doors of communication with those involved.

We’ll introduce you to the T minus 5 timeline1 (transaction minus five years) in chapter 1, which is a valuable tool as you consider the impact of a business transition on those closest to you and those who have a vested interest in your company. You’ll also read about bringing balance to your professional advisory team so they can efficiently and effectively facilitate a successful transaction.

As you proceed through these chapters, we’ll end each one by offering questions to reflect on your own circumstances and guide you in your journey. You’ll be introduced to new perspectives and encouraged to step into various aspects of personal transition planning and to establish new ways to find joy and purpose in the next stage of your life.

For Your Benefit

We have spent our careers in the financial arena. With each of us coming from different backgrounds and experience—from venture capital to business lending to business ownership, family business, and wealth management—our paths have helped us see the true need owners have for personal transition planning. Each of us brings decades of financial and entrepreneurial knowledge to our clients, and now to you.

Our approach to ownership transition ensures you have the tools and resources necessary to reflect