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Key Takeaways
- Expect major operational, structural and cultural changes once new ownership takes control.
- Protect your team by negotiating severance and transition terms before signing the sale agreement.
- Letting go is tough — prepare mentally to move on and find your next passion.
Congratulations, you just sold your business! But don’t expect things to remain the same under the new ownership. Oftentimes, new owners have a different vision of what to do with your business to help achieve their needs, and they may have different ideas on how best to do certain things inside the organization, resulting in a ripple effect of chaos for the transitioning staff in its wake.
This article will help you figure out what to expect after a change in control, so the expectations of you and your team are properly managed ahead of time.
Related: 4 Ways to Stay on After Selling Your Business
Every single aspect of your business can change
Even if the buyer says nothing will change post-sale during their “romance” period of getting you to agree to a sale, that is rarely the case, as a buyer starts to put their own fingerprints all over your business.
This could be things like changing your product mix or website to better bias their products or other preferred vendors. Or, changing all the various systems your business uses for accounting, marketing or operations, that will be a learning curve for the legacy staff.
Or, the other specifics of your business, like the details of your sales and marketing plan, or the details of your sales commission plans, as the Buyer may have experience in doing these things in other ways that better sync with their current business. So, the point here is to get ready for a lot of change.
Get ready for potential layoffs
Even if a buyer says they plan on keeping everyone post-sale, that doesn’t mean they will. There are high odds that overlapping positions, especially in the management ranks, are likely candidates for the buyer to want to remove. And a buyer will be a lot less willing to carry any struggling staff members that you were more forgiving with.
If a salesperson is not hitting their sales quota, or the sales organization has too much excess capacity in relation to the leads coming in, those staff members will be a risk. So, prepare for this during your negotiation period, to make sure any severance packages are pre-negotiated for any layoffs in the first year, to protect your staff members.
Related: Why I Decided to Sell My Small Business: ‘I Still Choke Up’
Get ready for a lot of paper-pushing busy work
Everything is going to change post-sale. Your legal entity’s name, your bank accounts, your credit cards, your sales tax filing systems, your government contracts, your social media profiles, your about us pages, etc. Prepare to backburner your normal work for a while, as all this minutia gets sorted out, setting everything up for the new owner and communicating such changes to all of your staff, customers, vendors, partners, etc.
Your finance team is most likely going to be doing lots of post-sale report building and auditing for any working capital adjustments or other post-closing monies that are moving around between the parties. The first few months post-sale will not be your most efficient work months!
You need to prepare to let go of your baby
Your “baby” is grown up now and post-sale is somebody else’s “teenager” to worry about, not yours. Psychologically, this can be a very difficult time for the founders to transition through as the new owner starts to implement their vision and desired solutions, which most likely are different from how you were doing those same things before.
That is okay; let go and be flexible to the new owner’s needs, and don’t have any opinions that are set in stone. If you think they are screwing something up, that is their lesson to learn, even if you communicate your past learnings on such topics, and even if they are falling on “deaf ears”.
You may need to find a new passion
Nobody loves a business as much as its founder does. And that founder invests a lot of blood, sweat and tears in helping that business grow and succeed. But once you cash out, and you no longer have the economic upside you once had, your emotional ties to the business will start to fade over time.
When you feel that passionate flame starting to burn out, most likely within a few months of closing your transaction, that may be a good time to start looking for your next “baby” to raise, where you can get that passion back from your next venture.
It is very hard to simply be an “employee” in the buyer’s organization after you have been steering the ship for all the years prior.
Related: 7 Ways to Embrace the Change After Selling Your Business
Closing thoughts
I have been the CEO of three businesses that were scaled and sold to a new buyer. The themes discussed in this post come from firsthand experience of what happened in the wake of each of those changes in control.
So, before you sign your name to your pending sale agreement, make sure you can deal with the above issues raised, practically and psychologically. If you can’t, maybe you shouldn’t sell?
But, if you can, make sure you go into the sale process eyes wide open, and for anything that you feel could become post-sale issues you want to protect against, make sure you get it pre-negotiated in your sale agreement before you sign on the dotted line.
Good luck!
Key Takeaways
- Expect major operational, structural and cultural changes once new ownership takes control.
- Protect your team by negotiating severance and transition terms before signing the sale agreement.
- Letting go is tough — prepare mentally to move on and find your next passion.
Congratulations, you just sold your business! But don’t expect things to remain the same under the new ownership. Oftentimes, new owners have a different vision of what to do with your business to help achieve their needs, and they may have different ideas on how best to do certain things inside the organization, resulting in a ripple effect of chaos for the transitioning staff in its wake.
This article will help you figure out what to expect after a change in control, so the expectations of you and your team are properly managed ahead of time.
Related: 4 Ways to Stay on After Selling Your Business
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