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How to stay in your business after you sell

When it comes time to sell your business, no matter your motivation, you may not be ready to leave, so prepare appropriately, and you won’t have to!

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Accomplishing the goal of selling your business

Some entrepreneurs launch a business to bring their talents to bare, to achieve their dream of serving a specific type of client in a specific way, never considering selling their business, but many are acutely aware that their business may someday be worth selling. When your business is humming, your management team is strong, and your metrics can describe the value in your business, it may be time to sell. But that doesn’t mean you have to leave your company.

Charlie Brock is chairman of the board at FourBridges Capital, a Tennessee-based investment-banking firm that focuses on advising Southeastern middle market businesses. Charlie is also CEO of Launch Tennessee, a public-private partnership focused on supporting the development of high-growth companies in the state of Tennessee with the ultimate goal of fostering job creation and economic growth.

He notes that it is true that when you sell your business, you aren’t necessarily destined to get the boot or sail off into the sunset – there are ways to actually stay put after you sell.

Brock says, “Define your motives. For many business owners, selling a company is a once-in-a-lifetime event. You’ll make the best decisions for you and your team if you understand exactly what’s driving you to sell. Work backwards: ask yourself what you hope to have and where you want to be after hands shake and the deal closes.”

If you envision your role continuing after you sell, Brock says you’re likely motivated by financial security, noting that “Maybe you enjoy operating and growing your company, but you feel the need to de-risk your financial portfolio and remove your name from the company’s debt.” The second reason many want to stick around is that it is your career calling. “If you built a company around something you’re passionate about, you might find that you prefer working in the business rather than on it,” Brock adds.

Paving the way to sticking around

In his own words, Brock offers the following tips to staying in your business after you sell:

Motives can help determine the best transaction strategy and course of action. Be honest with yourself – and your advisors – about your reasons for selling, so that you can achieve the outcome you’re seeking.

Know your type and market appropriately. Once you know why you’re pursuing a transaction, it’s important to attract the right kind of buyer.

For owners looking to de-risk their portfolios, a financial buyer (i.e., private equity group) may be the best option. If you go this route, you’ll sell a percentage of your interest and give up some amount of control. Typically, a deal will be structured so that you’ll still have skin in the game, and you’ll probably be expected to continue operating the business for a period of time.

On the other hand, if you want to stop running the business and start working within it, market to a strategic partner who has some experience in your industry and/or a desire to expand into it. Most likely, your ideal buyer will want to keep you on board because of your market connections, your closeness to the company, and your industry competence.

Label yourself. If you’ve identified a potential buyer, define your post-transaction role early in the process. Know the exact nature of your future responsibilities and reporting relationships.

It’s not unusual to shy away from this part of the conversation: it can be hard to advocate for yourself, and many owners worry that they’ll scare away their buyers. While keeping quiet could make for smooth sailing in the short term, you’re simply delaying the inevitable – and setting the stage for bigger battles down the line.

It’s best to make your non-negotiables and deal-breakers clear from the start. Here again, having an advisor is invaluable: it allows for some “good cop/bad cop” role playing, and it adds a much-needed third-party perspective during negotiations, which can be difficult and emotionally charged.

Don’t get halfway down the aisle before you realize a marriage isn’t in the cards. Be open about your ideal role, and find out whether it aligns with your potential buyer’s expectations. And if it doesn’t? There are other fish in the sea.

Recruit the experts. It’s important to lean on experts throughout every step of the deal process. But when you start finalizing terms, experts become a necessity.

Is your understanding of your future role actually reflected somewhere in the lengthy, complex and legally binding documents that you’re about to sign? An investment banker and an experienced M&A attorney can ensure that the terms you think you’re agreeing to are, in fact, buried in the legalese. Your advisors know what to look for, and more importantly, how to spot red flags. And assuming you’ve shared your motives with them (see #1), they can alert you when they come across something that doesn’t suit your fancy.

Check your ego at the door. If you’ve been the top dog at your business since its inception, prepare for a change: it’s a completely different ballgame after the money changes hands. Even if you’re positioned as CEO post-sale, someone else’s finances and decisions will be in play.

The transition can be challenging and emotional. Should you choose to sell and stay, remember why you’re doing it – and what you’re getting out of the deal. Chances are, if you pursue a transaction based on sound reasoning and expert advice, the benefits will outweigh the trade-offs.

The takeaway

Brock advises that whether motivated financially or by your passions, you have the power to prepare a scenario where you remain involved long after your company sells.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Entrepreneur

Is this normal (you wonder about your business)?

(ENTREPRENEURIALISM) It can be lonely not being able to openly ask potentially embarrassing questions about your business – there’s a way to do it anonymously…

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Entrepreneurialism is wildly rewarding – you are fully in control of the direction of your company, and you’re solving the world’s problems. But it’s also isolating when you’re not sure if what you’re experiencing is normal.

Sure, there’s Google, news networks (like ours), and professional connections to help you navigate, but sometimes you just want to know if something simple you’re seeing is normal.

Is Instagram Stories really where it’s at? Probably not if you’re a consultant.

Is it normal for an employee to attempt to re-negotiate their salary on their first day? Nope, but how do you keep the desirable employee without being bullied into new terms?

Do all entrepreneurs spend their first year in business as exhausted as a new parent? Sometimes.

You have questions, and together, we can share our experiences.

We have a brand new Facebook Group that is already wildly engaging, active, and you’d be amazed at how selflessly helpful people are – and we invite you to be one of them.

Want to anonymously ask a question about something you’re unsure is normal or not?

Click here to submit your question, and we’ll select as many as possible to discuss in the Facebook Group!

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Business Entrepreneur

Amazon on a collision course with politicians as they strengthen their monopoly

(BUSINESS) E-commerce has come a long way in the last decade, specifically led by Amazon, but are their controlling ways putting them on a collision course with regulators?

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In March, Amazon stopped replenishing weekly purchase orders for tens of thousands of vendors in a move that has stirred up some trouble. The tech giant has once flexed its power over first-party sellers over their platform. And it’s not the first time.

Amazon originally sent out to vendors as an automated message citing the hold up in orders as a technical glitch. The following day, vendors were told the change was permanent. The affected vendors were categorized as making $10 million or less in sales volume per year and not having managers at Amazon. Vendors selling specialized goods that were difficult to ship were also a factor.

The effects can have remarkable effects on the market as Amazon’s algorithms decide who is able to sell what to whom via their near-ubiquitous platform. According to John Ghiorso, the CEO of Orca Pacific, an Amazon agency for consultation and manufacturers representatives, the decision is driven by financial data such as total revenue, profitability, and catalog size.

In a response from an Amazon spokesperson, the change was made in order to improve value, convenience, and selection for customers. The mass termination of purchase orders and the delayed response from Amazon herald the transition to the One Vendor system, putting vendors in an exclusive relationship with Amazon. This system will merge the current Seller Central and Vendor Central.

Amazon’s message is loud and clear: they will do what’s in their best interest to mitigate the market for their convenience. One may be reminded of the anti-trust lawsuit against Microsoft in 2001.

The lack of warning didn’t do them any favors either.

While smaller businesses need to change for Amazon’s program, first-party business will revolve around larger brands like Nike with whom Amazon is maintaining a relationship.

Despite the streamlined platform Amazon is going for, the company wields power over vendors and customers alike. Capitalism is one thing, but monopolies are a whole other ball game, and politicians are finally paying attention.

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Business Entrepreneur

Culture Codes is the guide you need for company culture questions

(BUSINESS ENTREPRENEUR) One of the biggest sellers of a company to a prospective employee or customer is their culture. Culture Codes has compiled some the biggest companies cultures in convenient decks for you to study and align with.

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Organizational culture is a hot button of conversation. While a variety of definitions exist, one way of defining Culture is the way businesses exist – a summary of values, rituals, and organizational mythology that helps employees make sense of the organization they work in.

Organizational cultures are often reflected in Mission, Vision, and Value statements of organizations.

What many entrepreneurs or new organization struggle with as well, is how to create a culture from the ground up. What kinds of statements and values do they advocate? What are areas of focus? Who are our competitors and what can we do to create a service, product, or quality advantage?

Building a strong culture can be challenging, but a good place to start is looking at the best cultures around.

A new resource by Tettra, Culture Codes, has everything you could want to know on different companies their cultures available for you to study up.

Over 40 companies employing over 280,000 employees have created culture decks and collected core values and mission statements. Companies like Spotify, Netflix, LinkedIn, and NASA have all contributed information.

This information is great for young companies or entrepreneurs to start building a schema about what kind of culture they want to create.

Or existing established companies can look towards peers and competitors and help decide what statements they want to engage culture change on.

For job seekers, Tettra can help potential employees gauge if they are a fit for an organization, or discover that maybe an organization they dream about working for has a culture they may not jive with. And perhaps most valuably, transparently showing off your culture and allowing it to be compared means that organizations can better compete in the talent market.

Recruiters should be obsessed with talking about culture – because it keeps people in the door.

The reasons why people leave employment: work/ life balance, poor treatment, lack of training, or relationship issues with a supervisor or boss; in many ways are a by-product of organizational culture. If you want to compete in the talent market, make culture a selling point and show it off in everything you do.

Even consumer’s benefit from learning about an organization’s culture – values that indicate a commitment to excellence in ethics make consumers feel good about supporting an organization.

It pays to have a good culture. I encourage you to head over to tetra.co/culture-codes and see how companies like Etsy are keeping it real, every day.

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