Serial entrepreneur Jerry Jendusa had a vision when he sold his company, Emteq Inc. in 2014. He would stay on with the company, travel to each of its seven offices around the globe, and explain the transition to employees and the benefits of where Emteq was headed.
However, Jendusa would soon learn that “once you sell, you sell; you’re no longer the final decision maker,” he said.
Not even three months after the sale, Jendusa quit Emteq in a move that he described as “probably premature.” He had hoped to stay with the company for at least another year to ease the transition.
“(Florida-based B/E Aerospace, which acquired Emteq) didn’t really want any of that,” Jendusa said. “They wanted me for a totally different role within the organization, and I just wasn’t interested.”
Business owners in their 30s and 40s might have an idea of when they plan to sell their business and a person in mind that is capable of carrying on their legacy. But timing the market and preparing for the right opportunity to sell – even if that opportunity presents itself in a business owner’s middle age – is critically important, said Brad Herda, a certified FocalPoint business coach based in Sussex.
“It’s strategically being prepared for opportunity, versus saying it’s going to be a point in time or a dot on the map that has to happen,” Herda said. “That opportunity could happen when you’re 39 because of market trends or capitalizing on what might be happening with economic conditions right now.”
When the time does come, the less ambiguity the better – not just in terms of business financials, but also the reason behind the sale.
“If you’re the buyer and you know why it’s up for sale and what that story is, it’s going to give you a sense of confidence and trust that you’re not being duped. Having clarity on that is key because it will also help maximize the value of that business when it sells.”
An entrepreneur should always run their business with a valuation and an ultimate exit in mind, said Corey Vanderpoel, owner and managing director of the Taureau Group, a Milwaukee-based investment banking firm.
In an ideal scenario, an entrepreneur will have had conversations about selling the business years in advance, not just with family, but with trusted business partners and M&A experts. Through those conversations, a business owner can identify weaknesses and better understand how a prospective buyer will look at his or her business.
“We can help them work through those challenges to the business so they can create more interest, which drives negotiating leverage, which drives value,” Vanderpoel said.
Many business owners that want to sell will do everything they can to take as much capital out of the business as possible. That’s a common mistake, Vanderpoel said.
Instead, the most opportune time to sell a business is when it has a promising future.
“You’ve actually invested in the organization and administration of the business to then be able to present what those opportunities are and the financial performance of the business,” Vanderpoel said.
Vanderpoel equates the situation to selling a home. Oftentimes upgraded kitchen appliances or a retiled bathroom can make all the difference in the sale.
“All of those investments in the business will actually result in value when you sell the business. And that can be counterintuitive to a lot of business owners.”
In Jendusa’s case, the issue wasn’t the lack of a well-formulated plan. Rather, he found he wasn’t fully prepared for the emotional component of selling the business and navigating the uncertainty of what came next. Most business owners aren’t, Jendusa said.
“What are you going to do in your second-half act? Because if your whole life and identity, (as it was) in my case, was attached to my business, there’s going to be a point you go through this emotional disturbance.”
For Jendusa, his encore was co-founding Stuck LLC, a Wauwatosa-based business advisory firm, in 2014.
Still, it took Jendusa years to fully understand how he felt about the Emteq sale, the impact it had on his former employees and the process of moving on to his next endeavor.
However, when he and his former employees gathered for a five-year reunion following the sale of Emteq, Jendusa discovered the long-term benefits of selling the company.
“(The employees) developed so many skills and were so capable that they could work anywhere,” Jendusa said. “And then really enjoying and celebrating the ride and the culture that we created. Because anytime there’s a sale, the culture is going to change, whether it’s for the better or for the worse. And who’s to judge that?”