Preventing Seller’s Remorse when Selling a Business
The best way to treat Seller’s Remorse is to prevent it. Here’s how.
We’ve seen it happen to dozens of seasoned entrepreneurs. You’ve decided to sell your business and after finding the perfect buyer and navigating the entire M&A process, it’s time to close. You sign the final documents and just as you’re ready to pop a bottle and plan a vacation, a sinking feeling sets in – seller’s remorse. Seller’s remorse is a very real phenomenon experienced by thousands of people who all set out with the best intentions and common goal to change their lives. While seller’s remorse can put a damper on what should be an exhilarating experience, the good news is that there are ways to prevent seller’s remorse and by reading this article now, you are better preparing yourself for the future.
What is Seller’s Remorse?
Seller’s remorse is the feeling of sadness or regret after selling a commodity that has emotional and financial value to the seller. Oftentimes, people experience seller’s remorse when they sell an item such as a house, collector’s item or their business. In our case, we work with entrepreneurs who have started, built and grown a business then decided that it was time to sell and move on. Selling is a natural stage in the business lifecycle but that doesn’t make selling any easier when there are financial and emotional attachments involved. Entrepreneurship is a lifestyle and sellers often feel a loss of identity or purpose when selling off their greatest achievement and asset. Seller’s remorse doesn’t only strike after the deal is closed; many sellers begin to feel regret when they are already deep into the process causing them to question the deal and sometimes, even back out altogether.
Seller’s remorse doesn’t always show itself very clearly; it can also mean questioning the deal and regretting certain aspects. Wondering what you will do now that the business is sold or questioning if the sales price is worth it are signs of seller’s remorse. Fortunately, there are ways to prevent seller’s remorse and by educating yourself now, you’ll save yourself a lot of grief in the long run.
How can I prevent Seller’s Remorse?
Preventing seller’s remorse is much easier than treating it. Arm yourself with these helpful notes so that when you decide to sell, you are less likely to experience regret when the deal is done.
Have a good reason to sell. Selling a business is a huge milestone, probably up there with getting married or having children. Before you pull the trigger, think about why you want to sell. Retirement, burnout, declining health, desire to pursue new endeavors are all great reasons because they allow for life after the business. If you are not really sure why you want to sell or your reason isn’t sustainable, you may find yourself missing your business and regretting the sale.
Explore options & learn. Knowledge is power, and the more you know about the M&A process and post-sale life, the more control you will have. Explore all options for the sale so that you are aware of all possible outcomes and can plan accordingly.
Financial security. Take time to crunch the numbers and determine what kind of sales price you’ll need to continue living your current lifestyle. Understanding the state of your financial security upfront can help you determine if the timing is right or if it’s better to hold off. We recommend involving a CPA or financial advisor in this step.
Be sure about your plan. Once you’ve explore your options and you have a clearer picture of what your life will look like after the sale of your business, think on it. Make sure you really want to do this, you have the financial means to survive and you are doing it for the right reasons.
Find an agent. Finding an M&A agent that you trust is crucial to preventing seller’s remorse. Having someone on your side during the sales process will help immensely, especially if something unexpected comes up. When seeking a business broker, find a firm that represents sellers. Take a look at some of their past deals and testimonials to get a feel for their reputation prior to reaching out. Your financial advisors and CPA may even be able to recommend a broker to you.
Stay confident. Sometimes, our wandering minds get the best of us but try not to second guess your decision to sell. If you begin to feel uneasy, think back to what motivated you to do this in the first place (here’s where those good reasons come in) and review your plan.
Seller’s remorse is a normal reaction to selling a substantial asset that has meaning to you – but don’t let the fear or regret stop you from pursuing your dreams! Every business owner has been in your shoes and it’s only natural to wonder if selling their business is the right decision. If you are unsure, it is better to wait on selling until you feel more confident and consulting with trusted advisors or business intermediaries can help push you in the right direction. As mentioned before, preventing seller’s remorse is much easier than treating it – take the time to prepare for selling your business before making a move.