Former Owners Talk About Life After Selling
Congrats! You worked hard for years to grow a successful business, toiled through endless due diligence questions from 20-somethings, and suffered through 20 versions of redlined purchase agreements. Now you have sold your business and officially started your golden years. It’s time to tee off.
What do most owners do after they sell their business? Actually, most show up for work the next day. It might seem anti-climactic, but most buyers want to have at least a short transition period with the seller. Unless the owner has been operating remotely and/or has a strong team, the buyer typically requests a period of at least three to six months. The transition can be even longer, especially if there are significant deferred payments such as earnouts or rollover equity. My record so far for my clients is over 10 years of working after closing. This was for a seller who originally wanted to fully retire three months after closing, but discovered that he loved the industry, just not the stress of owning a company.
Many owners like to take time off after a sale. Terry Heilman, former owner of Sunstone Circuits, decided to focus on family and friends. “I told myself that when I sell the business, I will not plan any further business-related activities for at least two years, as I had been very focused on being CEO,” he says. Now that nearly two and a half years have passed since the sale, Terry plans to begin reviewing board of directors opportunities and executive mentoring.
Ralph Reichart, the former owner of Coastal Circuits, has taken on a couple of new positions. “Since selling my shop, I’ve gotten much more involved in the assembly side of the business, something I did not have much time for when running the fab shop full time,” Ralph says. “I did a stint at an EMS shop to learn more about the process, and am currently the founder of a company (MetisLogic) that is developing manufacturing readiness software for EMS companies and their customers.”
Other owners focus on a mix of hobbies and business. For example, Rocky Catt, also a former owner of Sunstone Circuits, volunteers as a mentor to clients who are starting their own businesses. He also spends a lot of time on woodworking.
Most buyers want sellers to sign long-term non-compete agreements, so owners have to be careful. However, it is possible to stay involved on standards committees with the Global Electronics Association or by advocating for the industry. Some former owners invest in non-PCB/EMS sectors, even in golf courses themselves. Of course, some of the most popular activities after a sale are to focus more on traveling and spending time with grandkids.
When considering the sale of a company, it is best to plan ahead, but how can you spend time planning when you are so busy running the company? Terry Heilman advises to “start planning for the sale of the company two years in advance to get well-documented and to assemble your team of experienced advisors.” Rocky advises keeping in mind that the sale will be a process that does not happen overnight.
Ralph offers the following guidance: “My advice to someone considering selling: First, don’t let inertia sabotage your sell. Just because you have been doing this for as long as you remember, doesn’t mean there isn’t a bright future ahead for you. Next, do your due diligence on the acquirer. Once you get your head around selling, don’t forget to trust your gut. It’s gotten you this far, and choosing the right person to sell to will ensure your years of hard work continue in the future. Finally, once you decide to sell, be ready to let it go. You may not agree with all the decisions made about your business by the acquirer, and you need to be comfortable with it. That’s the deal you signed, and the sooner you come to terms with this chapter closing, the happier you will be with the outcome.”
I can reinforce the need to prepare for a sale, both in terms of documentation and mental readiness. I know that professionals like me make getting deals done look easy, and the headlines make it look glamorous, but M&A deals are actually a lot of hard work.
Being prepared not only makes the deal go more smoothly, but it also allows owners to spend more time on the business or with family. The number one cause for M&A deals to fail is that the business starts to go down, so it is important for the owner to keep their eyes on the ball. After the sale, then you can have a ball.
Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through, StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.
