High net worth improves evaluation of life but not emotional well-being
I was at a business lunch the other day focused around a panel of Mergers and Acquisitions professionals. The subject matter was great and there was a ton of knowledge up in front of the room:
- Corporate Attorney
- CPA
- Business Broker
- Banker
- Recently exited business owner
But there was one BIG problem that stuck out to me. The discussion always seemed to go back to the dollar amount of a sale.
One comment that was repeated by a few of the panelists went something like “it was so much money, why wouldn’t the business owner want to do the deal?”
The statement actually made my blood pressure rise. There are tons of reasons why you shouldn’t sell your company! It is not just about the money.
There is a well-regarded study from Princeton titled, High income improves evaluation of life but not emotional well-being, about the golden 75K salary. In short, they found that 75k is just enough to meet most human needs and wants in the developed world today. There is a strong correlation between happiness and pay increases up until when the 75K mark is hit. Once you get beyond 75K, it just ain’t the same.
That’s because people actually care about their purpose and daily enjoyment more than their pay increases.
So surely it figures that the same logic would apply to a business owner? Would you sell your soul for 15 million dollars? If you don’t have a plan for life after business that may be just what you are doing.
There are many reasons why you shouldn’t sell your business.
The first one is so obvious I am not going to put it on the list. – YOU’RE NOT READY.
Okay… now that we got that out of the way, what does that really mean?
You’re only ‘ready’ if you can answer the below questions in detail. If you can’t, then there is a solid chance you won’t be happy after you sell.
- Why do you want to sell? ‘Just because’ is not an answer…
- What you are going to do with yourself after you sell?
- What makes you happy? Do you know what gives you the skip in your step?
- What will your new purpose be?
- How do your employees fit in the picture? What do you want to happen?
- i.e. who will stay or go and how that will affect your numbers?
- Where will you get your new sense of community? What social groups are you going to join and immerse yourself in?
- What will you do with the money? This may be a huge influx in cash. Don’t just throw it at random ventures to fill your boredom.
Too many entrepreneurs leave their company on a huge high after they hit their punch-out number. What you don’t realize is that there are many decisions that have to be made throughout the process that cannot be taken back.
You have a long time to live and reflect on the consequences of your decisions. If you don’t have a plan for your new life after the sale, there is a very high chance you will be unhappy with the results.
That is a risk not worth taking.
Without knowing the answer to who you are and what you want from your business, you may spend the second half of your life trying to buy or recreate the happiness you had when you owned your company.
No amount of money is worth losing your identity for.
Make a plan for your life after business with the same thought and effort you did to launch your company.
How will you get the same highs and challenges in your new life? How will you get your sense of passion, purpose, and community? etc. etc.
Before selling up you need to do a lot of soul searching, but nowhere near as much as you’ll have to do the day you realize you made a mistake in selling up. Ask yourself the tough questions first, then you won’t have to worry about them later.
See where other owners are at with the results from the Exit Planning Institute’s survey.
Readiness Survey