At What Age Should I Sell My Company?

That’s a question I hear often. The easy answer… well, there is no easy answer.

A lot can be said about the individual who wants to continue working as they progress in age, but invariably the real question is not about their age as much as it is about their desire to retain equitable value.

I’ve seen business owners who’ve owned and run  their business into their 90’s. I’ve also seen 30+ year-olds tell me that they are “burned out”. So, how do you know if it’s time to go? That depends upon YOU!.

First, lets dispel a myth that says for a business owner to work, they can’t work after they sell their interest. A business owner can work as long as they like, either for the entity they are selling, or if that is not possible, for another entity. Most of these “Type A” individuals have dedicated their lives to their business, and enjoy challenges, being productive, thinking, and working in a team environment to achieve goals. When you sell your company, that is not something that can be easily turned off.

But the key factor, as noted, is not your age. Actually, its a point on the timeline that intersects current corporate value, age  of owner, an owner’s ‘effectiveness’, and a prospective buyer’s perception of risk.

Although no scientific study has determined a magical number, my opinion is that the confluence of those lines becomes much more clear the later in life you work. In fact, I have seen owners take a reasonable tumble in value the longer they wait; in one  instance having someone even pass away right while talking to Calder Associates after they realized they should have sold earlier.

Many times, I use the age of 68 to have owners really think of their “value” factor. It’s true, I’ve seen many 68 year old’s who could win an arm wrestling contest with a 35-year-old. But the issue isn’t just strength, it’s, as I like to think, the ease at which you can push a snowball … up a mountain.

As we get older, and after years in your business, the drive and passion of most business owners is “different” (notice I didn’t say ‘less’) than it was when they first started the company. That is likely true for any business owner at any age after a few years. But there are other factors active.

The most important of those is perception and risk. When an owner sells their interest, the buyer not only buys a going-concern, but they buy the knowledge and usually time of the owner to ensure they receive the value they paid for. As Ben Franklin  said, … “In this world nothing can be said to be certain, except death and taxes”. Because of that forthcoming and likely terminable event, buyer’s understandably know and feel that they are acquiring an asset that is becoming less valuable over each day after closing unless they can understand and transition the company to their new style of leadership. Rome wasn’t built-in a day – neither is a corporate transition.

Accordingly, you will see owners always thinking about that day they will sell all or a part of their equity, and buyers trying to determine when will they start taking on greater risk. For the business owner, it’s an inflection point where the mountain changes its upward angle and rolling that snowball becomes harder. Buyers perceive and believe that.

A company is made up of its people, products, customers, vendors, and processes. It’s also an understanding of how those work together that help define a company’s “secret sauce“. Buyer’s want to understand and know that, and Seller’s usually can’t specifically tell them. It’s second nature.

As age and time creeps up on an owner, the confluence of factors that diminish a company’s growth, effectiveness, and transitional value become ever more prevalent. Owners have asked me why then doesn’t a buyer take out a key-man policy to protect against any downside risk? Although in some cases they do, the cost of that policy could be large and it will be taken out of delivered cash flow in the form of a purchase consideration reduction. More to the point, buyer’s don’t want to get these policies inherently because their goal is to make GREATER CASH FLOW AND PROFITS, not just get a refund on their injected capital. Like you, the only factor they can’t prolong is time.

So, when you start thinking about your future and when you likely would sell your interest (we all do the day after we start or buy our company, admit it!) separate your emotional view from your economic one. Make sure to sell when the value is greatest and the road ahead is not one where you need twice as much effort each succeeding year to push that snowball up the mountain. You  can always work, but its easier to push a snowball up an increasingly steep mountain if you’ve received your money to buy a few $250,000 Snow-Cats!

Want to discuss your situation? Call me at 732-212-2999, or email at info@calderassociates.com.

Calder Associates announces the sale of Offenbachers Acquatics

Calder Associates is pleased to announce the sale of Offenbachers Aquatics to Antson Capital Partners, a private equity group from Baltimore, Maryland.

Offenbachers is a one the Washington DC metro areas best known retailers of quality outdoor patio furniture and specialty items. With operations in Maryland and Virginia, including 7 stores and warehousing in Maryland, Offenbachers is a staple in the area.

Antson Capital Partners specializes in acquiring lower middle market companies that concentrate in retail, contracting, logistics, service, and light manufacturing.

Calder Associates acted as the exclusive and advisor to Offenbachers on this transaction. Richard Stopa, Managing Partner of Calder’s Washington DC Metro office was the principal intermediary.

Calder Associates announces the sale of Tri-State Grouting LLC

On August 4, 2014, Tri-State Grouting, LLC was acquired by Aqua Resources, unregulated subsidiary of Aqua America. Calder Associates of Pennsylvania was engaged by Tri-State Grouting, LLC and the Mergers and Acquisitions Intermediary. Susan Rosner, Managing Partner of Calder Associates of Pennsylvania initiated the transaction, acted as financial advisor and negotiated the Sale.

You can read the complete news release on Aqua America’s website by copying and pasting the following link into your browser:

https://www.aquaamerica.com/about-aqua/news/view-article.aspx?id=1746

Calder Associates announces the sale of Fail Safe Testing

Calder Associates is pleased to announce the sale of Fail Safe Testing, Inc. to Long Trail Leadership Capital, a private equity group from New York City.

Fail Safe Testing is the nation’s leader in fire service safety testing of fire hose, ground ladders, and fire pumps. With operations in over 20 states, the company tests more fire hose than any other single organization nationwide.

Long Trail Leadership plans on continuing the growth of Fail Safe Testing in existing areas and other parts of the USA.

Calder Associates acted as the exclusive and advisor to Fail Safe Testing on this transaction. Stephen Wain, President of Calder Associates was the principal intermediary and financial adviser.

For further details, please contact Debbie Steinkohl at Calder Associates (732-212-2999 x103). For information on Fail Safe Testing, go to www.failsafeusa.com.