Reflecting a Year After Selling Your Business: Did You Make the Right Decision?
A year has passed since you sold your business. At the time, it likely felt like a monumental moment in your life—whether it was the result of years of hard work, an opportunity to cash out, or a strategic decision to take the company to the next level with a larger partner. But now, with some distance, you're probably asking yourself a deeper question: Did I make the right decision?
This question goes beyond simply considering the financials. Of course, maximizing shareholder value is a significant part of the equation, but was it the only factor you considered? When you sold your business, you didn’t just sell a financial asset—you sold a community of employees, a customer base, and a set of values that defined your company. So the real measure of success isn’t just whether you got a good price but whether the people connected to the company—your customers, employees, and partners—are better off a year later.
Did Your Customers Benefit?
One of the most critical factors when selling a business is how it impacts your customers. After all, they are the lifeblood of the company. Did the new owners continue to prioritize their needs, or were they just seen as line items in a revenue report?
In many cases, a larger or more resourceful buyer can offer benefits to customers—new products, better service, or improved technology. Perhaps under the new ownership, your former company had access to more capital, enabling the rollout of features or services you always dreamed of but couldn’t implement. Maybe customer service was enhanced through more robust support systems.
But that’s not always the case. There are numerous examples where customer service has declined after a sale. Consider the story of a successful software company that was bought by a large corporation. While the price tag for the sale was impressive, customers soon felt the negative impact. Support was outsourced, the product became more generic, and innovation slowed to a crawl. Within a few years, what had once been a close-knit community of loyal users turned into a frustrated group seeking alternatives.
Before selling, one important lesson is to ask the potential buyer hard questions about their plans for your customers. Will they continue to innovate? Will they invest in customer success? Your relationship with your customers is a valuable asset, and you owe it to them to make sure that value is protected.
Are Your Employees Happier?
Perhaps the most emotionally charged aspect of selling a business is the impact on your employees. You’ve likely spent years building a team, nurturing their careers, and fostering a sense of loyalty and belonging. But what happens when someone else takes control?
If you selected the right buyer, the sale could lead to new opportunities for your employees. Perhaps the acquiring company has better career development programs, larger project scopes, or the ability to offer benefits and perks you couldn’t. Ideally, a good buyer will recognize the talent in your team and give them room to grow. If the employees are happier and more fulfilled, that’s a clear sign you made the right decision.
On the other hand, in many cases, employees are the first to suffer after a sale. If the new owners are more focused on cutting costs than fostering talent, layoffs, benefit reductions, or role consolidation can follow. The culture you carefully built could be replaced by a more rigid, corporate environment that stifles creativity and discourages initiative. For instance, in one notable acquisition, a successful retail chain was sold to a private equity firm, which immediately cut staff, reduced wages, and outsourced jobs. Employee morale tanked, and in a short period, the company lost key talent, which led to a decline in operational performance and customer satisfaction.
When considering a sale, it’s important to ensure that your employees will have opportunities to grow in the new company. Ask yourself: Will the buyer invest in their development? Will they retain your team, or will restructuring lead to significant layoffs? Your employees’ futures should be a priority in your decision-making process.
Is the Work Better?
Beyond the financial and emotional aspects, consider whether the actual work being done by the company has improved. Has the sale allowed your former team to focus on more meaningful tasks? Have processes been streamlined, and is the company more innovative than it was before?
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In a successful sale, the acquiring company might bring in resources or expertise that improve operational efficiency, allowing employees to focus on higher-value work. For instance, more advanced technology could reduce time spent on administrative tasks, freeing up creativity and problem-solving efforts. This can lead to a sense of fulfillment and engagement among the team, as they are working on projects that truly matter.
However, the opposite can also happen. When a sale is primarily financially driven, without attention to the quality of the work being done, the day-to-day tasks may become monotonous. Bureaucracy can creep in, and employees may find themselves stuck in a system where immediate profitability takes priority over long-term innovation. This can lead to dissatisfaction and stagnation, which is dangerous for any business.
Maximizing Shareholder Value: Necessary, But Not Enough
There’s no doubt that maximizing shareholder value is a legitimate goal when selling a business. After all, many stakeholders—founders, investors, and early employees—are counting on a financial return. In many cases, this return is what allows people to fund future ventures, retire, or simply reap the rewards of years of hard work.
However, focusing solely on financial gain can lead to an unsustainable future for the company. According to studies, up to 70% of mergers and acquisitions fail to deliver the expected value, often because they overlook critical factors like company culture, employee engagement, and customer satisfaction. Long-term success requires a more holistic approach that balances financial gains with the health and well-being of the business as a whole.
What Should Sellers Consider?
If you’re contemplating selling your business, it’s important to go beyond the numbers. Consider the broader impact of the sale, and make sure the buyer’s vision aligns with the values that built your company. Here are a few critical factors to consider:
A Personal Reflection
Recently, I had the opportunity to coach an entrepreneur facing a tough decision about selling his company. He had two offers on the table: one from a larger firm offering more money but with the leadership he didn’t feel entirely comfortable with, and another from a smaller organization that aligned more closely with his values and vision. I encouraged him to focus on the buyer that could best meet the needs of all stakeholders—his employees, customers, and himself as the owner.
I reminded him that a year from now, when he puts his head on the pillow at night, he should feel confident that he made the best decision, not just for the money but for everyone involved. If the money alone is what brings you peace of mind, it’s a sign you need to reflect on what that says about your motivations. True success in selling a business comes from knowing you’ve done right by all those who contributed to its growth.
Such an important topic! Selling a business goes beyond financial success—it's about making sure your employees and customers continue to thrive.?
Developing executive leaders with Solutions 21, author of "Succeeding" (now available on Amazon), entrepreneur, inventor, and advocate for food security.
1 个月AHHH -- yes! And, if you transferred the business to family or a management team, did you tee them up for success or get every ounce of value you could and leave them in a position to need to crush it to extract anything close to similar value?