Hot dog king Dick Portillo made a life-changing decision this year. After announcing he was going to sell his chain “to take life easy,” he struck a deal with Boston investors. Details are sketchy, but the investors reportedly paid in the neighborhood of $1 billion.
Most people don’t have businesses to sell, but they all make important financial choices: changing jobs, retiring, or switching careers. So advice for a business owner on selling a firm applies to everyone.
Making a key decision like selling a business is like building a Portillo’s hot dog. The quantitative measures are important: the dog (the buyer) must be the right size; the bun (the employees) must be the right temperature and treated correctly; the price must be competitive. But the qualitative ingredients — the mustard, onions and relish — on top of the dog are equally as important.
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These are three qualitative concerns that you won’t find on a balance sheet.
Family dynamics
Often, your work is at the center of your family. You may have missed holiday parties because you were at the office finishing a project for your largest client. Your kids might have found it easier reaching you at work than at home.
Think about the effect of your decision on your loved ones. Include family members in making your decision.
Your emotional life
Think about the effect on yourself too. You may enjoy being recognized in the community for the work you do with the local chamber of commerce. Your identity will change now.
You also may have an emotional investment in the company. One of my clients, an owner of a six-employee interior design company, drew a scatter chart of everyone that was influencing his decision to sell the company. At the end of the exercise, he decided that the buyer did not care as much about his workers as he had hoped. He decided to keep running the business for the time being.
Transition planning
What do you plan to do with your time after the sale? Are you riding off into the sunset, or will you stay on for a couple of years until the transition is over?
When you leave your office for the last time, you will need to have a plan in place. What have you always wanted to do but didn’t have the time for? Are you charitably inclined?
Waking up and doing whatever you want is a great plan — for a week. One of our clients, a midlevel executive from the Gold Coast, retired to spend more time with his family. But after a few months, his wife was urging him to get out of the house and find a hobby. He — and she — realized they had been happier when they had their own lives to lead Monday through Friday.
Put pen to paper and come up with a serious strategy for your post-business future. And then write a backup plan in case the first one isn’t making you happy.
Some say a Chicago-style hot dog is “dragged through the garden.” Drag yourself through the garden when selling your business. You will be happier for it and have a more flavorful experience.
Fitzgerald is lead adviser at Aequus Wealth Management, based in Chicago’s River North neighborhood, and is happy to buy you a Chicago-style hot dog somewhere between the city and Naperville.