Informing & Supporting
Conditioning Air Professionals & the Industry
Tampa, US
12:48 am, June 24, 2024
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Are You Sure You Want to Sell?

Patrick Lange

I’m in the business of selling companies, so I rarely turn away a good opportunity. But in a few rare cases, I’ve advised an owner to reconsider his decision. Here are some of the reasons I recommend against selling, even when the company is profitable and marketable.

The owner is too young to quit working. Most of the seller’s regrets I’ve seen have come from owners who sell too early in their careers. They might be in the early 40’s and have spent a few years building the business up to three, maybe five million dollars in value. Then they go through a rough patch, personally, professionally, or just lose motivation to do this for the next 20 years.

Five million dollars sounds like a great payoff (and it is) but parting from their company and their work at such a young age leaves a lot of empty space in their life. (You can only play so many rounds of golf a week.) They have energy and drive and nowhere to invest it. They often think, “I’ll just start over and do it again,” but that’s harder than it sounds when the economy, the cost of money, labor, and equipment has changed. The market may be very different as well.

Not to mention they probably have a non-complete clause in the sales contract that prohibits them from operating in the same market for a period of time.

The money isn’t as much as they thought. If you’ve been running a $5 million business, you’ve probably been taking a high six-figure salary. It’s easy to get used to that lifestyle. You may have acquired a big mortgage and other responsibilities, and most sellers have projects or travel plans that will use up some of the capital they’ve acquired. Even with a great return on your investments, it’s going to be a challenge to make that money last a lifetime.

And that’s the math before the taxes from the sale hit your first year’s income. Many investors err by basing their lifestyle and income needs based on the year they retire. Inflation and other economic realities can eat into your nest egg at an alarming rate. Your financial advisor should be one of your primary partners in deciding if your business sale profit can last as long as you will.

The post-sale period isn’t all they thought it would be. If your spouse was employed by the business, he or she is also out of work; that can be a big adjustment for many couples. Your spouse may also be busy with a separate career of their own, and not be ready or willing to participate in all the travel, projects, or leisure you have planned. You might be bored, lonely, or faced with a home improvement to-do list that’s not nearly as gratifying as building a business.

Many owners are unprepared for how emotional letting go of a business can be. You’re no longer a successful owner; you’re not the boss, and you’re not the go-to guy fixing all the problems. Many owners start to question their identities: who am I, if I’m not my company? It can be a tough transition.

When I meet with an owner who has not thought all this through, I often encourage them to put off the sale for a year or two. Whatever is prompting them to sell (including a juicy offer) might be better next year. You’ll certainly benefit from more financial planning, and more planning for life after business ownership.

If you are interested in what your business might be worth, I offer a complimentary and confidential opinion of value. 

About the Author

Patrick Lange is an experienced HVAC-specific business broker with Business Modification Group based in Horseshoe Beach, Florida. He has a unique background in financial planning and has even owned an HVAC business himself. This makes him well suited to working with some of the most successful HVAC business owners in the country. Specializing in companies with 1-10 million dollars in revenue, he maintains a network of buyers and sellers in the industry. He has sold more HVAC businesses than any other broker in the United States over the last three years and is currently the President of the Business Brokers of Florida (North Florida District.)


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Informing & Supporting
Conditioning Air Professionals
& the Industry