The Hangover

It seems a fitting time of year to write about hangovers. Perhaps a few are still nursing the remains of their holiday hangover as I write this blog.

In this case, however, I am not referring to a hangover of the over-indulgence kind. In this instance, I am referring to the form of hangover that affects many company owners after they sell their company and the check has been wired to the bank account.

Over the years, I’ve been involved in acquiring companies from dozens of small company owners. Many of them, it seems, placed little to no thought what so ever into what they would do after the sale. What life would be like. How they would spend their time. Whether they would continue to work in or for their former company and its new owner and, if so how that would go.

I’ll share a number of post-sale experiences I’ve witnessed over the course of this blog but one in particular comes to mind today that gave me, as the buyer, significant Head Noise. And, clearly the seller had his own share of Head Noise to deal with as well.

shutterstock_149964170 (2)We acquired a company from a very successful and highly creative entrepreneur. As so many entrepreneurs and private company owners do, he built his company from nothing. He ate, slept and breathed it 24/7/365 for years. He built a business with a strong brand and true value. And, it was continuing to grow. He had also attracted and nurtured a very creative team of employees.

But, he was tired. He had other ideas and other things he wanted to do with life or so he said during diligence meetings. So, he decided to sell. The business was a great strategic fit for our company. A deal was struck and the owner was paid a handsome price– well into seven figures. He was rich. Struggles were over. Or, so he thought.

The seller wanted to stay involved in the business as part of the deal but not be saddled with day-to-day responsibility. As buyers, we accommodated him because we liked the idea of knowledge transfer and his ability to nurture key customer relationships through the one-year transition. To reduce his workload, we promoted his number 2 manager to senior manager and went about the business of integrating and standardizing operations and reporting.

Very soon, this entrepreneur began to struggle. He soon realized that he no longer called the daily shots. Someone he had hired who had previously reported to him was now, effectively, his boss. Normal course sign-offs were required to spend money. There were budgets, GAAP accounting, strategic planning and other “corporate stuff” that many private company owners aren’t used to.

The pressure and changes mounted along with, I believe, a deep sense of loss and a new type of pressure involving life changes and the future. The owner became disruptive to the staff which created morale problems. Then suddenly, he reached a breaking point.

Very early one Monday morning, I received an urgent call from the new manager in this regional office. He called to tell me that the former owner had apparently come into the office over the weekend with chains and padlocks. The chains had been threaded through the handles of most file cabinets and locked.

Thus, holding the filing cabinets hostage for the better part of the day.

Difficult negotiations followed. Relationships were damaged and, as owners, we were forced to part ways with the former owner through a negotiated exit from some terms of the asset purchase agreement.

I am certain this business owner didn’t intend for things to end that way. But they did. I would imagine that there were deep regrets as well. And, I believe this series of events played out as they did because so many business owners who sell their company are solely focused on how tired they are at the moment they decide to sell. Then, they focus their entire effort on trying to complete the sale.

They place little to no focus on mental or emotional preparation for life after they sell, not to mention financial, tax or estate planning.

They end up with a post-sale hangover that no amount of headache medicine can cure after the fact. But, all could have been avoided with proper advance planning and support from relevant experts.

Note: If you have an interesting and/or educational CEO story of Head Noise caliber, write to me at I’d love to speak with you and share your story in my Head Noise blog. You can tell your story either on the record or, without attribution.

Cameron Bishop is a partner with The Capitus Group. The firm provides comprehensive business value enhancement and transition strategy solutions. Partners and Advisory Directors comprise an experienced team of business professionals who have successfully owned, run, grown and sold companies. Capitus utilizes proven value enhancement and risk reduction techniques to enable superior transition options.

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