Ex­it­ing a busi­ness presents owner with crit­i­cal de­ci­sions

The Taos News - - BUSINESS - By Sandy Nel­son

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.

Photo by Jane Philips/The New Mex­i­can

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.

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