Selling your business
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.