The emotional journey of business transition planning
By ATB Financial 3 December 2020 4 min read
Grief. Mourning. Doubt. Relief. Joy. Many business owners may experience all these emotions and more when they think about finding a way to successfully exit their business when the time comes. Whether the successor is family, an acquiring business, or an employee who’s risen through the ranks, the emotional ride of transition planning may be arduous and overwhelming.
It doesn’t have to be this way, though. With a prepared and positive outlook on this intense process, business owners making their exit can move past the anxiety and find comfort in seeing their life’s work pass into capable hands.
Acknowledge the emotionality of retirement and seek out new purpose
Making the shift towards leaving your business is a major decision fraught with many challenges, one of which may be a feeling of grief. “If you are experiencing feelings of sadness or grief, those feelings are real. It’s completely fair to acknowledge those feelings and mourn the release of something you’ve worked so hard to build. Don’t be afraid to seek out support processing those feelings,” says Amanda Vella, Business Advisory senior director and transition consultant at ATB.
She adds, “How you process this phase will have a lot to do with the life you lead after exiting the business.”
You may feel unmoored when you begin to realize how transitioning out of running your business could leave you with large swaths of time that used to be filled with non-stop entrepreneurial activity. According to the Harvard Business Review, many business owners “overlook the psychic benefits of their companies, particularly the sense of community and purpose.”
Loss of identity can be challenging for some people accustomed to having their reputation and day-to-day routine tied to running their company. It could be helpful to begin seeking another community, peer group or non-profit to join in order to fill those retirement hours.
“If you can find another outlet, it can put back some meaning into your life,” says Vella.
Minimizing succession stress for loved ones
An added stress can stem from family businesses that don’t plan ahead for the next line of successors. “I can see how families would be devastated because the business owner didn’t plan how their departure would impact their families, with the fallout being, for example, children fighting over who takes control of the business,” says Vella, who notes how integral it should be for business owners to table a transition plan (along with a succession plan) years ahead of any expected transition.
The exhaustion of selling, the relief of closing
Going through the selling process can be taxing on both mind and body, Vella says, but what helps is identifying the goals of the business upfront so you can weed out successors or buyers who don’t meet those criteria.
For example, one hand-wringing angle can relate to a buyer who doesn’t have any plans to keep the company in the same area, or who doesn’t come from the company’s neighbourhood. “If one of your goals is to ensure the next owner retains the business in the same community, or the buyer is from the same community as the business and the employees, that can be worth laying out from the beginning,” she says.
You might also have a ballpark figure in mind when buyer offers began to roll in. “Have a number in mind that you would like to see your company sell for, because that will give you a benchmark to work with,” Vella advises.
It can be tiring to pore through the many acquisition offers, if that’s the direction the business is headed, without having clear values in place that separate top-shelf buyers from low-level suitors.
Due diligence is another part of the selling process that can be laborious for managers who don’t prepare for it “Years in advance, business owners should be putting their financials in a data room and anticipate the questions they’ll be asked about their data and the hundreds of documents they have on file,” Vella says.
If an executive from the company is poised to take the corner office, it can only help both of you to spend time to discuss your managerial responsibilities and what they should expect as the new leader of your former business. With one-on-time with a leader who’s been in the trenches, they may later feel more at ease when they shoulder more obligations. Also, you’ll be comforted to know an experienced employee will continue the legacy you began. Peace of mind goes a long way after everything you go through with transition planning.
When you reach the closing stage of your succession plan, you might be washed over by relief and even joy. The emotional rollercoaster you just got off can now be seen as a learning experience that hopefully taught you how to navigate business transition without stumbling out of the gate.
How this helps you later in life depends on your next step as an entrepreneur. But what’s often less discussed is how this successful departure—beset on all sides by a dizzying array of emotions—revealed to your company’s staff, partners and customers how business leaders can hand off the keys with grace and level-headed preparation.
Find out more about selling your business successfully with ATB’s Business Transition Guide. Want to talk some more? For tailored advice around business transition planning reach out to our Business Transition team at firstname.lastname@example.org