Thread by @LeadershipAcad1

For all you ETA and PE guys out there:

I’ve had close friends and family make exits on their SMBs recently.

Here’s what you need to know about owners’ psyche, motivations, etc.

#ETA #SMB

Selling is often a sad experience for these guys.

Their work is a significant chunk of their identity.

They know that selling is a good thing (for risk mitigation, estate planning, reward for diligence, etc)

But…

This is their life’s work…

Friend 1: sold after decades in industry

Friend 2: 45 years of building

Friend 3: 15 years of building

Often the business has been their ministry (explicitly or implicitly). It’s how they help the widows and the orphans.

It’s how they gave second and third chances while helping men maintain their dignity.

Often their business is their sport. It’s where they competed daily. It’s where they saw wins and losses and high fived a teammate after a hard fought season.

Often their business is where they taught their kids valuable lessons - and the kids from their community.

Often their business was their connection to the community via committees, business groups, councils, charities, etc.

So when we say, “the business is their baby”, it doesn’t capture the full picture.

Sure - they care about it. But it’s different.

So when you talk to them about buying their business, keep these things in the back of your mind.

These guys are often “ah shucks…I ain’t that smart” kind of guys.

They aren’t MBA type smart.

They are masters at execution and team building.

They are masters at coalition building and problem solving.

They are masters at customer experience and retention.

Sure - they could use some optimization.

They could use some pricing theory.

They could use some new tech.

Honestly, you may be able to add some real value. That’s great.

So what motivates owners to sell?

1) it’s the chase. This is good for the seller bc money scratches this itch. They deserve a fair price.

So what motivates owners to sell?

2) it’s the people and the culture.

And this is where you should be careful. If the employees don’t like the owner, or at least the leaders, then you should be careful buying the company. Why is that team there?

You need to talk to the owner carefully about the team. Ensure the owner that you respect the team he/she built.

Trust that he knew what he was doing when he built that team.

In each of the three cases above, the seller took less money to go with the buyer they most trusted to take care of the team.

That means communication respect AND competence.

Owners want to sell to someone they know won’t ruin their legacy and will provide growth opportunities for the team.

Share with your peeps
@SMB_Attorney
@PrivatEquityGuy
@lawyer4SMBs
@bentigg
@StrongpointRich
@ClintFiore
@SMB_ash
@MikeBotkin_

Cheers amigos. There are going to be a ton of businesses for sale in the coming decades.

Be a person worthy of carrying on these legacies.

RT / like / DM / dance / down a beer / follow / etc

If you liked these ideas.

But mostly…just be a good dude out there.

#ETA #SMB