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Q: What's the hardest part of the exit process?

A: Life after exit

The question of what they should be most concerned about when it comes to the exit process, is one raised repeatedly at the Supper Club, most frequently by members considering how, why and where to organise their own “exit”. Anyone interested should, obviously, download The Supper Club Exit Playbook.

But at a recent Supper Club lunch for members who have already successfully negotiated their “exit”, the consensus was clear. Maybe it was just a result of these members being who they are, being at the stage of the founder’s journey where they are long over the joys and frustrations of the sale process; but most at the lunch were experiencing or had experienced some loss of purpose post sale. Most were happy to admit to experiencing a kind of identity crisis following exit.

This seemed to be tougher to deal with than other parts of the exit process. Having been sustained day and night through long years of working and striving to grow and then sell their business, most found only limited comfort (or found comfort for a limited time) playing golf, tennis, working in non-executive roles or for charities, or catching up on the holidays they’d denied themselves.

For some of the members present there was certainly a degree of guilt in not having to work so hard. Many have been tirelessly pursuing entrepreneurial goals and dreams since school. One, at the early stages of a four-years earn out, admitted that after years of being the boss he was finding it hard to adjust to being a not-particularly business employee, despite enjoying a decent salary.

From our experience of members who have exited, the happiest put almost as much effort into planning their post-exit life as they do the sale of the business itself. Here are a few tips picked up from the Supper Club exit community:

  1. Don’t bank on a cushy life as a non-exec. The shift into a lucrative series of non-executive director (NED) roles is perhaps on paper the most obvious route for exited founders. With their expertise and experience of having been on the journey themselves, they can surely bring a wealth of wisdom to moat growth businesses, with or without taking a stake (see section 3 on investments, below). They can offer insights and share intel with the next generation of founders or bring entrepreneurial smarts to established corporates, especially in the same industry. And all this without the 24/7 hassle of making the big calls. But while some founders enjoy a profitable and busy life as a portfolio NED, many more don’t take to it at all. There are lots of tales of founders hating the lack of ability to actually do anything (other than suggest and guide), while at the same time bearing considerable risks and fiduciary responsibilities. Tip: If you plan to take NED roles post exit, then take the time to find at least one and try it before you exit.

  2. Start a new business before you exit the first one. Some founders are capable of nothing else but running a business. Having exited one, such natural entrepreneurs will quickly gravitate to running a new venture. More than one has sold on a Friday and started a new business on the following Monday. But it might make even more sense to have the businesses overlap. There are several advantages to this. For a start, it can help convince potential buyers that you are no longer needed at the businesses you are looking to sell (clearly only an advantage if you don’t expect to have a role there post exit). To be able to show hard evidence that you are not working in the business you are selling is a bonus, plus at the point of exit the new business will already be up and running. Tip: Don’t allow the new venture to detrimentally effect the first one – or to slow down the sale or exit process. If you are needed in the first business, get someone else to start the next one for you.

  3. Don’t be a hellish angel. Alongside a life as a NED, many post-exit founders look forward to a life as an “angel investor”. If this is the plan, formulate a clear investment strategy and stick to it. Rather than chucking money here and there, the safest route can be to join other angels in an angel investment fund. Either way, the two best options are to stick to investments in a sector you know well (and get very deeply involved in these investments, maybe taking a board role) or pick a very broad range of smaller investments across different sectors. Tip: Having agreed on a clear strategy, stick to it.

  4. If you stay with your business, be clear on your role There are earn outs and there are founders who post-exit like to step back into a non-executive role (often chairman). These are both perfectly credible options to ease the transition, for you and the business. But don’t fall into the trap of not being quite clear what you are there to do. A very clearly defined role helps you as well as employees and external third parties (suppliers, clients, any new investors). Tip: Communicate what your new role is explicitly and try hard not to interfere with decisions made by whoever is now in charge. Remember you made some mistakes, too!

  5. Think of life after exit as another career Many founders fall into starting and running their business, many didn’t go through any kind of career planning. Thus the idea of planning life after exit may equally be alien. But while instinct got you to the point of exit, thereafter it makes more sense to have some kind of plan. And it can help to review strategies adopted by those at the start of their career. Think about desired outcomes and ways to achieve them. Tip: Talking to other founders who have been through this process before can be a huge help. Communities, such as the Supper Club Exit Community are a great source of tips and wisdom on where to get assistance.

  6. Think of your family It may be controversial to point this out, but as a founder focused on the growth and then the exit of a business there is a high chance you may not have been around much in recent years (Covid and lockdowns notwithstanding). The family unit may have grown up around this arrangement. It isn’t terribly nice to recognise, but you may have to work to establish a new place in the established systems and structures of family life. It can be hard on a spouse to find his or her other half suddenly always under your feet, occupying the spare room/office or cluttering up the living room all week. Tip: Much like any retirement planning, putting in place a regular weekly structure can help everyone establish new patterns of living and working.