To Business Owners: What Is Your Retirement Experience?

[jrcunniff]

For many of us, retirement is largely about the saving process and determining that moment to move from the working world to the non-working world. If you’re a business owner, the same might apply, but with some caveats. If you want to sell your business and find a qualified buyer, that moment may choose you as much as you choose it.

Was hoping to get perspective from those of you that have experienced it, or will experience it. Share anything you’re comfortable sharing, but some specific questions I have:
* How long did it take for you to find a buyer?
* Did you work independently or with a business broker?
* What level of involvement did you have post-sale? (Clean break? Short training period? Ongoing consultation?)
* What, if anything, would you change about your experience?

Appreciate any insights. Or if there are other forums/message boards that business owners like to read, I’d be interested in that info too.

 

[phil1ben]

I started a thread when I decided to sell my business in 2016. I have been posting semi-annual updates since then.

https://www.early-retirement.org/forums/f26/those-that-retired-from-their-own-business-80699.html

 

[Ronstar]

* How long did it take for you to find a buyer?

I wasn't a sole owner. I had partners. I gave 6 months notice that I was going to retire. About the same time, a former employee told the boss that he wanted to come back as part owner. I met with him over lunch and worked out a deal for him to buy part of my shares. The company bought the rest. Getting these buyers lined up and deal made took a couple of weeks.

* Did you work independently or with a business broker?

Independently

* What level of involvement did you have post-sale? (Clean break? Short training period? Ongoing consultation?)

In exchange for the company buying a portion of my shares, I agreed to work part time (2 days a week) for a year post sale. I primarily trained my replacement about 1 day a week during that year, with remaining 1 day a week wrapping up my work. Also during this year, the company paid me monthly installments for the stock purchase.

* What, if anything, would you change about your experience?

Nothing - it went very smooth.

 

[Monterey298sc]

I own a 100 yr old business. I have tried to sell for 10 yrs. long story but our line of business has changed and selling is not a option. I own 2 locations full and clear, so we put just the property’s up for sale last week. We will close the business after the sale. I am so excited to finally make that decision. We chose NOW because of taxes that will be coming with the new admin . Selling now , taxes will never be this low again. Capital Gains will skyrocket amd other taxes. Best to do it now !

 

[jrcunniff]

I started a thread when I decided to sell my business in 2016. I have been posting semi-annual updates since then.

https://www.early-retirement.org/forums/f26/those-that-retired-from-their-own-business-80699.html

Thanks! I checked back over the last month so I didn’t repeat a topic being discussed, but didn’t go back far enough to see this. Will definitely check it out.

I own a 100 yr old business. I have tried to sell for 10 yrs. long story but our line of business has changed and selling is not a option. I own 2 locations full and clear, so we put just the property’s up for sale last week. We will close the business after the sale. I am so excited to finally make that decision. We chose NOW because of taxes that will be coming with the new admin . Selling now , taxes will never be this low again. Capital Gains will skyrocket amd other taxes. Best to do it now !

That’s a really good point on the tax climate. I’m not quite at the point where I want to sell/retire. I’m challenging myself to manage through the COVID downturn over the coming months, and get back to the financials we had in 2019. But I’m wondering about how long it’s taken others to identify prospective buyers, as I may want to start planning for it before the end of the year.

 

[Monterey298sc]

I own a 100 yr old business. I have tried to sell for 10 yrs. long story but our line of business has changed and selling is not a option. I own 2 locations full and clear, so we put just the property’s up for sale last week. We will close the business after the sale. I am so excited to finally make that decision. We chose NOW because of taxes that will be coming with the new admin . Selling now , taxes will never be this low again. Capital Gains will skyrocket amd other taxes. Best to do it now !

Update.

We are on month number 6 with our 2 property’s for sale. We have had some interest , however with COVID and commercial property not moving it may take a couple years to sell. I waited to long, but who knew there would be a pandemic. We are not happy , but this is the problem when you own a business and property. We will continue to keep business open until sold .

 

[Koogie]

^^^ Sorry to hear about your problems. "If it wasn't for bad timing I would have none at all" has often been the story of my life as well.

We are planning on shutting down our business next year and fully FIREing (I have been semi retired since 2015). However, as ours is a service business and we lease our premises, it shouldn't be has hard as what you are going through.

 

[Yoheadden]

We own a 2nd generation business in our 43rd year. We are planning to sell/close in 3 years. In a way, the date is choosing us. We will need to update our POS register system by then. If we spend that kind of money, then we would be locked in another 5-7 years, which we don’t want to do. Every industry is different. We have a Hallmark card and gift store and as you can assume, our entire business has changed. I’m hoping to find a buyer. This would make the entire process much easier, instead of going through a close out sale.
There is a similar thread on here that had information on a podcast about selling businesses. One such story was about a accountant/tax planner who was approached by competitors, seeing if he wanted to sell. I’m considering doing a similar strategy and approaching other stores to see if are looking to expand. I still need to look into using a broker.
Either way, this has been weighing on my mind a lot. 3 years will go by quickly and whichever route we take needs to be planned for.

 

[Scrapr]

I sold my small construction subcontractor business Jan 1st of this year after 30 years. I started trying to get out in 2016(?). I was training 2 employees to take over. They were good to excellent at the nuts & bolts.....but had no interest in going out to network or sell. That problem sort of solved itself as one of the employees came down with a serious illness & the other could not do his role.

In 2017 I recruited a homebuilder superintendent to come in & take over. He started in October of 2017 as an employee with the expectation he would take over. A month later my wife caught cancer & I was helping her a lot. She passed about 17 months later. So I wasn't around as much as I would have liked. He knew the homebuilding process but from the contractor side not the sub contractor side. So he had to learn about employee relations, trucks & servicing, contractor relations, legal & licensing stuff. So about 9 months in he was struggling a bit. I hired a business coach I knew & that really helped him. We finalized the contract in December of 2020 & he took over in Jan of 2021. It is a payout over 5 years. Not ideal. But there ya go

He is doing great. Construction is doing well. His sales are up about 25% year over year. He has had some price shocks from suppliers & managed it pretty well on passing through the increases.

I stop in the yard with the employees about 1x a week & the office about the same. I enjoy seeing the employees & dispatcher. Checks are coming in regular. Mentally I am not counting on the last couple year of payments. But hopeful. I am travelling some & have 3 weeks at Christmas in London/Paris. The crew says i look younger. I am enjoying life after. I still go to Association meetings & enjoy the people.

I did not go to a broker because i didn't trust them to market it well without word leaking out. And I didn't want the buyer looking through my books & focusing on tiny details. Lots of owners find a buyer that throws out a big price then hammers them in due diligence. I could have sold to a competitor. But that would have been a wholesale price. I would have required a cash sale from him.

Let the good times roll

This is a business sale podcast that I listened to a lot. It was a bit late for me but was interesting none the less

https://builttosell.com/radio/

 

[RetiredHappy]

My husband and I decided to start our own business at end of 2007. We had about 100 employees and in 2014, my husband really wanted to sell the business and retire, while I wanted to run it for another 10 years. We had attended many sessions by mergers and acquisition brokers in industry conferences through the years and were receiving periodic mailers from these brokers.

Out of the blue, we received an offer in August of 2015 from 2 entrepreneurs, young Ivy League grads, out of Boston. We decided to check them out and they gave us a serious offer but wanted us to stay on for a year, 50% down and the remainder would be paid over 5 years. It was a no go for us. We did not like the offer but it got us thinking that we might be able to get a comparable offer with a broker. We checked out the 2 large brokers who specialized in our industry. They told us flat out that there would not be buyers for California companies in our industry.

My husband did more research and found a large California-based broker and was local to our area. He set up a meeting in October with the broker, who was one of the founders. By the end of the meeting, the broker assured us that he would be able to have buyers for our business. He gave us templates and we submitted detailed financial data, including current balance sheets and past 3 years of IRS returns. The listing for our business came online the weekend before Thanksgiving. The following week, the broker had set up 3 meetings with potential buyers. We had face-to-face meetings with 2 of the potential buyers and the 3rd on the phone. The following week we had 3 solid offers. We picked the offer where we got our money in full and with a transition of a month. Our sale date was set for Jan 31st, and we stayed on until end of Feb 2016. We did spend many meetings off site to train the new owners all through January before they showed up in our office on Feb 1. We only informed our management team of the sale on January 29 and assured them that they would stay on during the sale and the new owners had no immediate plans to replace them. We gave each of them very generous bonus during our meeting and while they were shocked, they were pleased with the bonuses. Their bonuses ranged from 1X to 2X annual pay. We wanted to thank them for helping with running this very stressful line of business. We were not under any obligation to pay them a dime but it felt good to us.

The broker's 10% commission was well worth it. It turned out that the 3 potential buyers were connections which the brokers had all along and they were looking into buying a business.

 

[427Vette]

I also just sold my business. I originally contacted a broker to see if our business was actually salable and if it was worth anything. He assured me that it was. After a lot of paperwork transferring back and forth he listed it for us within 24 hours we had a serious buyer on the hook. In the few days after several more buyers came forward. It floored me that so many people wanted our little business.

You are right about how it’s hard for a business owner to pick exactly the right time to hang it up. Although our transition went smoothly it still took a year to complete the deal. After the transfer my wife and I were employed by the new owners for 30 days. That was just last week so now we are done. The 30 days was pretty much just making introductions and training.

There is no way we could have got what we did or completed the deal without a broker involved. He knew exactly what paperwork the buyers would want. He knew the proper procedures and went to implement them. I would never do it alone.

We were n business for 25 years and I never had a lawyer. If I were to change anything I would have developed a relationship with an attorney before I needed one in the capacity that I do to complete the sale.

Good luck with the sale of your business.

 

[Aerides]

We are not happy , but this is the problem when you own a business and property. We will continue to keep business open until sold .

What is the benefit to keeping the businesses operating, if the sale is purely for the RE? You're not selling/transferring the business, as you've said that will end when you sell. You've also indicated you're having trouble staffing lately. Why not close the businesses, but keep the buildings well maintained for selling? Does your RE agent think that the business has to be open for prospective buyers?