Exiting a business presents owner with critical decisions
When the owner of a small business wants to move on, whether to retire or to pursue other ventures, he or she has three potential paths: close the business, sell it to investors or to a competitor or let the employees purchase it.
Each option has consequences for a community that relies on local businesses for jobs and revenue generation.
Stephen Wiman, former owner of Good Water Company in Santa Fe, never considered closing the independent water company he purchased in 2005 when he exited the company 11 years later.
“I wanted the business to continue,” he said, “because it did a lot of good work in the community. I spent probably half my time doing volunteer work in water conservation and supporting causes in which I believed. I got close to a lot of customers who had really complex water and could afford what was actually very expensive treatment.”
He also cared about the well-being of his employees. “I wanted to keep my employees working as they were loyal to me and helped us establish a good reputation in the community.”
That reputation helped Wiman survive the devastating recession that began a decade ago. “For the first few years I owned it, we had about 20 percent annual growth, and people were really interested in water treatment,” he said. “Then the recession hit, and only those who had to treat their water were interested. Customers who viewed our services as a luxury started to disappear because of the cost of equipment and service.”
Wiman mulled the decision to sell for a few years before he listed the company. He tried to sell to competitors eager to acquire his customer base and willing to retain core employees. “No one in my family was interested (in buying the business), and my key employee was not interested,” he said.
After about six months, Wiman took the business off the market when his broker told him it was overpriced. He listed at a lower price with another broker, and it sold. “I was just ready then to get out, and selling and moving on became more important than the money. I think I sold the company for what it was really worth.”
The new owner kept the employees who wanted to stay though some later left over differences with how the new owners approached customer service, compensation and other matters.
“These intangibles are difficult to assess in the sales process,” Wiman conceded, and as much as he wanted to find a buyer who shared his vision and values, he knew the new owner was free to downsize or overhaul the company as they saw fit.
“It is probably very difficult to find a buyer that will run the business as you would approve,” he said, “but that is part of the territory when you sell and move on to other things. I was ready to move on, and I have no regrets.”
Business owners contemplating an exit from their business should talk with those who have already done it. And business brokers can help owners with company valuation.
Finance New Mexico connects individuals and businesses with skills and funding resources for their business or idea. To learn more, go to FinanceNewMexico.org.
Stephen K. Wiman, former owner and geologist for the Good Water Company, takes water samples at a drilling site in 2010. Wiman sold the business a few years ago. When the owner of a small business wants to move on, like Wiman, he or she has three potential paths: close the business, sell it to investors or to a competitor or let the employees purchase it.