It’s OK to sell your business to the highest bidder
Irecently helped a restaurant owner sell his business. He priced it at an attractive level and had several interested buyers, one of whom seemed especially eager to take good care of the restaurant’s employees and continue to provide the same level of food and service.
To get the deal done with this buyer, however, the owner had to lower his price and defer more of the payment than he had wanted. Ultimately, he agreed to do this because he cared about his employees, and because he had spent 30 years building the restaurant and hoped to see his legacy maintained. But it didn’t work out that way.
After he took over the business, the new owner changed the rules of employment, raised prices and lowered the quality of the food. Not surprisingly, the former owner felt violated. He felt as though a promise had been broken.
Of course, no promise had actually been made. But he had been led to believe that his legacy would be maintained. And now, instead of feeling proud of what he built over three decades, he feels ashamed of what the business has become. This is a classic case of seller’s remorse.
And that’s why I always tell people to do two things when they sell a business. First, take the highest offer. Second, get as far away from the business as you can, as fast you can. The unfortunate reality is that, in most instances, the former owner is probably going to hate what the new owner does with the business. It’s better not to have unrealistic expectations. It’s better still not to pay attention.
When I sold my vending and food service business, I had a buyer who wanted me to take a lower price because he was going to treat my employees and my customers well. I never bought the story. I had seen this company buy other businesses, and I had seen it institute its own systems immediately. That’s the company’s right, of course − but I wasn’t going to take less money to watch it play out.
Instead, I sold my business to a buyer who offered more cash. And I was glad I did. In the end, my employees were treated fairly. Some customers were fine with the change, and others would have liked us to stay on. The reality was that any new owner was going to run the business as they saw fit. I knew this and negotiated a quick exit with as much cash as I could get.
Even so, selling a business is a gutwrenching decision. As an owner, you may have spent a lifetime building both the business and the relationships within it. You care about your employees, customers and vendors. You want to believe that the buyer will treat them with the same respect you did. Sometimes this happens. More often, it doesn’t. But knowing that doesn’t make it any easier. You still have to look your employees in the eye after the sale.
But here’s the thing: if you accept a lower price with the expectation that this sale is going to be the exception, you are very likely to end up disappointed, maybe even bitter. No matter what they might say, the new owners have paid you for the business and have the right to do with it as they see fit. They are going to do this no matter what.
And that’s why I think you should take the money. If you’re not going to like what the buyer does anyway, you might as well get the best price.
What do you think? Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners to create personal and business value.
© The New York Times 2013.