Finish Big

Not an event, after all

"…there are four stages in the exit process, and doing the deal comes not first or second, but third. It’s preceded by the strategic phase, when you build into the company the qualities and characteristics that will allow you to have the kind of exit you want."- Finish Big, page 93

What little we do hear about entrepreneurs exiting (selling) their businesses is often hype and spectacle; tech startups that sell for a billion dollars, 18 months after incorporating. It’s almost always about the deal. The numbers. How much someone “cashed in” for. We are rarely exposed to the details of a “normal” private company sale, and we don’t hear about what comes before the sale… or after it.

Bo spent five years researching real life stories for Finish Big (many of which are in the book, and make for some truly engrossing tales) and determined that there are four distinct phases to a successful exit.

• Stage one is exploratory. Learning what options exist, and deciding what you do and don’t care about in an exit. It may also include coming up with a number—that is, the amount of money you’d be happy to walk away with when the time comes—and a time frame.
• Stage two is strategic. It requires learning to view your company as a product itself, not just as a deliverer of products or services, and then building into it the qualities and characteristics that will maximize its value and allow you to have the kind of exit you want (and to whom).
• Stage three is about execution. This is the deal stage, whatever type of exit you may be looking for. It could be a sale to a third party, but there are lots of other options that make more sense – a management buyout, a gift to your children, a liquidation of assets, or any number of other possible outcomes.
• Stage four is the transition. It begins with the completion of the deal and ends when you’re fully engaged in whatever comes next. Until you’ve moved on—not just physically but psychologically—to a new venture, a new career, a redefined role, or even retirement, your exit isn’t complete.

As Bo goes on to explain in the book, how each stage unfolds is unique to each entrepreneurs’ situation, but the important part is to appreciate that all four stages exist and you will go through them, whether it’s on your terms or through the lens of regret as you analyze stage 1 or 2 after the deal is done. So why wait?

Why?

"When you think about it, service is a factor—perhaps the primary factor—in creating the sense of purpose that successful entrepreneurs derive from their businesses."- Finish Big, page 261

A good portion of the book is dedicated to stage four of the process: the stage of transition into the next phase of life for an entrepreneur who has cut ties with her business. But interestingly, by focusing on the first two stages early on we can dramatically improve stage 4. Here’s what I mean:

As Bo discovered through his research, entrepreneurs seemed to fall cleanly into one of two camps, post sale; those who were exhilarated and proud of the exit, and those who were left feeling lost, confused and bitter. A big part of this came down to how much the latter group was gaining from their business beyond the financial compensation.

As illustrated in the quote above, Purpose is a massive part of what an entrepreneur derives from their business. Additionally, they usually find their Tribe (the people they interact with every day), Structure, as created by the demands of the work, and a sense of achievement, all of which can be difficult to immediately recreate post sale.

For me (many years from a sale, myself) reading that list was a good reminder of why I’m in business in the first place. There’s an altruistic desire to create positive change in the world through the work we do, and I’m proud of that. But it was also a great reminder of how much I gain personally from the structure, the daily wins, and the incredible tribe I get to be a part of.

Whether we’re entrepreneurs or not (and if you’re not, thanks for reading this far!), I think there’s tremendous value in taking stock of what we’re gaining from our work. Most of us need a paycheque to keep the lights on, of course, but hopefully there’s a lot more there for you than simply the money.

Strange Bedfellows

"'Everybody else spent the time talking about terms and fee structures and trying to impress us,' he said. 'These guys spent the time asking us questions and trying to understand our needs.'"- Ed Zimmer, as quoted in Finish Big, page 186

One of the big eye openers for me in reading Finish Big was the distinct difference in mentality between what Bo labels as Financial Buyers vs Strategic Buyers.

Financial buyers are those who want to flip your company, basically. They’re in it for the short-term cash, and they’ll maximize short term revenue and drive up the company’s annual earnings, often at “whatever the cost” (typically culture).

Strategic buyers are interested in leveraging what you’ve built. They might be a competitor, a complementary business looking to expand, or have some other business reason for wanting to acquire you. But, by and large, they want to see your business continue to succeed.

In other words, not all money is created equal. If you care what the business will look like after you’re gone, you’ll want to know what type of buyer will help take it there, and what their motivations might be for buying you at all. You’ll want to build the business around those motivations.