Sell­ing your busi­ness

Finweek English Edition - - MONEY -

Are you pre­pared for the wealth and life­style changes that sell­ing your com­pany will af­ford you? The f lush of eu­pho­ria that comes af­ter sell­ing your busi­ness and re­ceiv­ing a whop­ping pay­out brings with it the re­al­i­sa­tion that you are cash flush to be able to buy or do any­thing that your heart de­sires. So, does this mean that those who have sold their busi­nesses throw off their busi­ness suits, be­come beach bums and re­tire early af­ter squir­relling away their money, or do they blow their money on yachts, fast cars and seafront prop­er­ties, check­ing items off their bucket list as they go? His­tory shows us that it is a bit of both.

Con­versely, that ini­tial ju­bi­la­tion may soon be tem­pered by the emo­tions ex­pe­ri­enced by the in­stant turn­around in life­style changes, not all of them nec­es­sar­ily good. Sev­eral re­port a loss of pur­pose and are ille­quipped to deal with their new­found free­dom. Cases of the newly wealthy de­cid­ing on a life of leisure and early re­tire­ment im­me­di­ately af­ter the sale, only to re­verse this de­ci­sion by start­ing a new busi­ness af­ter a year or even a few months of leisure (read bore­dom), are com­mon. The most diff icult thing it seems, for most en­trepreneurs, is do­ing noth­ing.

South Africa is not short on en­trepreneurs who have launched and sold their suc­cess­ful busi­nesses for a sub­stan­tial pot of gold. Take Her­man He­u­nis for in­stance, cre­ator of MXit the so­cial net­work­ing com­pany, the sale of his com­pany was es­ti­mated to be around R500m be­stow­ing upon him a size­able chunk for his ma­jor­ity share.

And while noth­ing is not quite what Mark Shut­tle­worth did af­ter he sold his In­ter­net se­cu­rity com­pany Thawte in 1999 for $500m and headed off into space, it was not long be­fore he launched his next com­pany, as many fi­nan­cial­lyfree en­trepreneurs tend to do.

As with so many other things in life, there can be neg­a­tives. A sig­nif­i­cant amount of wealth brings with it its own set of prob­lems, es­pe­cially for the he­do­nis­tic and ill-ad­vised. There are count­less sto­ries of peo­ple sell­ing their com­pa­nies and squan­der­ing the mil­lions at casi­nos, on ex­ces­sive liv­ing and un­nec­es­sary lux­ury items, only to end up ei­ther bank­rupt or strug­gling to make ends meet some years later. It is dif­fi­cult to grasp the con­cept that a per­son who has been smart enough to make mil­lions from a com­pany that he or she has built up, could be so cav­a­lier with that wealth as to squan­der it away and end up be­ing near des­ti­tute.

But, it seems, the tem­per­a­ment of the en­tre­pre­neur is not nec­es­sar­ily the same as that of the suc­cess­ful in­vestor. Not all en­trepreneurs recog­nise the value of ex­pert ad­vice or in in­vest­ing a large per­cent­age of the money rather than frittering it all away on ex­trav­a­gant lux­u­ries, which is not to say that a bit of in­dul­gence is not de­served. But it is the re­straint ap­plied to th­ese in­dul­gences ver­sus in­vest­ment that is key to the suc­cess of bal­anced spend­ing and con­tin­ued liq­uid­ity and wealth.

Rather than gam­bling with that wealth by plac­ing it into untested and poorly re­searched in­vest­ments, many en­trepreneurs who find them­selves in this en­vi­able po­si­tion of be­ing cash f lush find a trusted ad­viser to man­age a per­cent­age of the money, while they man­age the rest.

Af­ter the sale of their busi­ness, an en­tre­pre­neur of­ten grap­ples with how best to use their new-found free­dom, not only from a f inan­cial viewpoint but also in terms of the life­style changes that come about. Some take short sab­bat­i­cals or em­bark on life jour­neys at ex­otic lo­ca­tions around the world. Some take up new hob­bies. Un­able to come to terms with the lack of ca­reer chal­lenge and ful­fil­ment, many im­me­di­ately pur­sue a new start-up busi­ness. Oth­ers, like Mark Lewis* (see case study) take a calmer, more mea­sured ap­proach.

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