Founder Exit Regret: Understanding the Complex Emotions of Business Owners
A significant number of founders experience regret after exiting their businesses, often due to unmet expectations and a lack of planning.
Founders and business owners in the US experience regret post-exit, with 50-75% reportedly feeling this way, according to the US-based Exit Planning Institute.
This emotional bond with the business, as well as the complex feelings of identity linked to being a founder, can make it difficult to let go.
When exiting doesn't meet expectations, it can easily turn into regret if life post-exit doesn't meet expectations.
A founder might think that after all their years of struggle, they want to sit on a beach once they sell up, but will the exit support that?
Having big, ambitious goals is great, but the event that's going to enable them - the exit - has to be the right one.
The Different Types of Exit
There are several options available, including:
Everyone is a Motivated Seller
Founders have different motivations for selling, with 56% citing emotional factors, 44% citing personal wellbeing and family considerations, and 13% saying they had not even considered the need for an exit strategy.
Why Leaving a Business Requires a Personal Plan
When we talk about a plan, it means several things, all interlinked: the exit strategy, how the founder is actually going to divest their stake in the business; then there's the personal plan, how they're using their wealth to meet their responsibilities and achieve their goals.
If they aren't in place, it is much harder to dictate both the type of exit and what success looks like.
For example, say the motivation to exit is to spend more time with family. A great goal, but without a plan in place, the founder could end up exiting without realising the full value of their stake in the business.
Achieving Every Goal with the Right Plan
One founder had built a successful consultancy over more than 30 years. The business had become both a livelihood and a legacy.
They faced a decision familiar to many entrepreneurs: how to step back while protecting their legacy of what they'd built.
Only by building that personal finance plan alongside the exit strategy could they start to see how it all fitted together.
Building that with the appropriate advisors went a long way to helping the founders exit on their own terms: financially secure, confident in their retirement, and assured that their legacy was in good hands.
It also meant that the team involved in the MBO were all aligned, including the remaining family members, and in a better position to drive the business forward.
The founder's experience highlights the importance of having a clear idea of what an exit looks like, encompassing both the business and the personal aspects of the exit, to avoid founder regret.
