Given the thousands of transactions we’ve been part of over the years, we’ve seen it all. One thing that we see more often than some might expect is seller’s remorse. This is totally normal, and can occur in a pronounced way even before the sale closes… sometimes derailing a transaction.
In this article we’ll examine some things to consider to mitigate seller’s remorse at any phase in a transaction.
Why does it occur?
A large part of the owner’s identity, perhaps even the largest part, is the role he/she plays at work. It governs social interactions (who you are having lunches with, who you spend the majority of your day with) as well as roles in the community (an owner may, because of his/her business, sit on various boards or play a role in the Chamber of Commerce).
If an owner doesn’t have other identities (perhaps a passionate hobby or a side business), seller remorse in the guise of “What do I do now?” can hit hard.
Before the sale closes.
Part of getting to know our clients here at Apex is asking in the very first meetings what the seller would do after a sale. We are interested in knowing motivations and know that strong motivations lead to cooperative and engaged sellers.
If we start to get calls and emails from the seller asking to slow things down or asking if this is truly the right thing to do, this is sometimes due to seller remorse. One of the first things we’ll go back to is that first conversation to remind him/her of what’s next. Then we’ll remind the seller of why.
Often there’s a health situation, or burnout, or simply the desire to do something else. By discussing the why (the past and present) and what’s next (the future) we can often make sure that sellers stay on track and engaged, which is key to a successful transaction.
After the sale closes.
A broker’s job is never done. Not only do clients come back to list new businesses with us, sometimes they go on to turn buyer after having sold.
We also get phone calls from clients suffering from seller’s remorse. We listen to the regret: “Why did I sell?” or “What should I do now?” These sellers stayed focused throughout the transaction and the remorse hit later.
Just as we do with sellers struggling before the transaction closes, we ask some key questions:
- Have you given yourself and your family some time? People can often be restless, dying to get “back into action,” but it’s important to take some time, not just to celebrate, but to also let your mind relax. Crops grow better when they are rotated in fields, so too even the best business owners need time to enjoy a liquidity event.
- Have you considered going back into the same industry? Sometimes people rediscover a passion once the burden is no longer on their shoulders, or they see a new opportunity in a particular segment of the industry. If non-competes aren’t a barrier, why not leverage what you know and continue to succeed in an identity you have no wish to discard? Sometimes sellers get hubristic, imagining themselves to have the Midas touch. Building and selling a company in one industry does not endow you with the ability to do it in a completely different one. Just because it was your “old” identity doesn’t mean it can’t be part of the new one.
We are always looking for a few good brokers to join our team, and a business owner with a fresh sale under his/her belt is a great candidate.
If that describes you… give us a call today.