Like most successful small business owners, George had invested much of his life and resources in his business over the last twenty plus years and realized personal prosperity and respect within the marketplace. The business had been profitable, with revenue generally stable and increasing, and George continued to see his personal standard of living increase.
At the same time, George had an ongoing irritant, and that was his inability to "really take a vacation". George and his wife Susan were able to "get away" a few times each year, but it was seldom more than a week, and he most always remained tied to the business in some way or another while he was gone. His phone and computer would still see a lot of action on "vacation".
Five years ago, George was "ready to sell the business and retire". They now had four grandchildren they wanted to spend time with, they wanted to travel, and simply "enjoy life" while they were still very healthy. George's transition from being "all in" to "I'm done" happened quite fast, surprising both George and Susan. Coincidentally, around that time, George was approached by a couple of potential buyers interested in purchasing his company. George was excited that he would now sell his company and he and Susan would be free to do all they wanted to do.
George experienced what he called "a sad awakening" when the most serious buyer made an offer that was significantly less than what George and Susan needed, along with an "earn-out" requirement. George would have to remain on as an employee for three more years in order to earn 25% of the proposed sale price. The potential buyer pointed to areas of risk including "the business still runs too much through you George", a lack of management team incentivized to remain during the transition, an inability to produce requested financials in a timely manner, and an unproven growth strategy as reasons for the low offer.
George had a huge decision to make, take the low offer and adjust downward the plans that he and Susan were looking forward to, or, reject the offer and invest more years in building his business the right way for a successful sale in the future. Not an easy decision considering a few days ago both he and Susan were envisioning travel and "grandkid time" becoming reality within the next few months. As George is now an employee working hard to earn the balance of his reduced payout, and Susan is doing much of the grandkid time by herself, he came to understand the hard way that you can never start too soon in building your business the right way for a successful exit.
