Being euphoric from your company exit strategy can come in various forms
A first step, in working with new clients who want to sell their company one day, is helping them think through what good looks like for the future. In other words, what will make them euphoric as an end game from owning their company.
During this discovery process, it’s common for us to come across owners that are running their company in a way that would be classified as a lifestyle business. A lifestyle business is run with the focus and priority of serving the personal needs and desires of the owner(s). A common symptom we see in lifestyle businesses is ownership that leaves the minimally needed cash levels in the business and any excess is taken out in short order and distributed to ownership to use/invest elsewhere. In other words, the company is really a means to a different end. There is nothing wrong with this. But realize the questions it will raise in the future if you did want to sell the business to a third party. A natural question will be why did you believe you could better deploy/invest the excess cash elsewhere and not back into your own business? And they will ask if your business is able to run effectively without you and in a way that they can build upon as some lifestyle businesses are great for the current owner, but not ready for a third party to assume responsibility for.
Let’s be clear, there is nothing wrong with running a lifestyle business and for many it is a viable exit alternative. When managed the right way, it can serve as your euphoric exit outcome because you manage the business by taking out the value year after year versus waiting until a single future one time sale event to a third party. But, for those that do want to keep available the option of one day selling to a third party, give thought to what decisions you are making regarding your business and how these decisions may be interpreted by a third party in the future. You don’t want years to go by and you decide you do want to sell and realize the years of running it as a lifestyle business are impeding your ability to do so. Give us a call and we can help you think through whether you have a lifestyle business and if so, is this the best euphoric end game for you.
