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In working with one CEO, I was assured that he was selling because he wanted to spend more time with his family. As we drilled down, it because clear that the real driver for his decision the souring of the relationship with his co-founder. His partner was really rubbing him the wrong way. As it turned out, that rubbing was part of an agenda – his partner had decided to force him out by playing on his weakness – his conflict aversion.
A second CEO was looking for greener pastures. She had built a very nice business that had grown rapidly but then leveled off. When we worked through the issues, it became clear that she was not willing to reinvent herself – become the CEO her company needed in order to reach for the next level. The role of CTO was more appropriate – but she could not see her way to take the ‘demotion’. She was thinking of selling her company because she did not want to be CEO any more – coveted the role of CTO – but could not face the stigma of working for somebody else.
A third CEO was convinced that CEO stood for Chief of Everything. He was a compulsive micro-manager who could not bring himself to trust other people. This was an acceptable approach until the company grew to a size that required a more distributed authority. His initial reason for wanting to sell was an approaching birthday. In the end, he had to accept that his aversion to delegate was the underlying cause.
Please understand that I am not saying that there are no good reasons for a founder to sell a company. Certainly there are. Health – or declining health – is a good one. Advancing age is another. Yet another is the inability to become the CEO that the company needs going forward. There are good reasons for selling. My point here is that it is important to understand exactly what the underlying reasons are – to clearly recognize the true drivers – and to avoid accepting convenient masks for those reasons.
The risks of not understanding can be very high. I have seen companies fall apart after a founder had put it through the process only to turn away at the last minute. In one case, the entire management team walked out after thinking for months that they would finally be able to unlock the value in the company they had dedicated their careers to. The founder ended up forlornly re-contacting prospective buyers on his own – offering the bloody stump of his company to anyone who would pay anything for it.
Finally, recognizing the reasons is only the first step on the path. It may be true that a journey of a thousand miles begins with the first step, but there are still those other ones to manage. Next time: working through the emotional issues.
© Dr. Earl R. Smith II
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Related Articles:
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Exit Strategies Under Current Conditions
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Exit Strategies Under Current Conditions – Part 2
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Exit Strategies Under Current Conditions – Part 3
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Exit Strategies Under Current Conditions – Part 4
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Exit Strategies Under Current Conditions – Part 5
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Knowing Versus Doing – Post-Success Malaise
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