Founders Exit Plan: After the Sale
TRANSITION AND ADJUSTMENT
In the months right after selling, you’ll be handing off the reins and beginning to live life as an ex-business owner. This phase is about fulfilling any promises you made to the buyer for a smooth transition, sorting out your personal finances from the sale, and taking care of yourself emotionally after the exit.
Fulfill your transition role: If part of the deal is you stay on for a while (which is very common, often up to one year per buyer requests, devote yourself to that transition wholeheartedly. Introduce the new owner to important relationships: key customers, suppliers, and employees beyond the leadership team. Show them the nuances of operations that might not be in the manuals. Essentially, transfer your knowledge. At the same time, step back enough to let the new owner lead – don’t undermine them or act like you’re still in charge. It’s a delicate balance: you’re there to help, but it’s their show now. If you’ve reduced dependency properly, this period will be shorter and smoother. Keep an eye on fulfilling any earnout conditions if that applies – you might want to help hit those targets even if you’re not required, since your payout could depend on it.
Announce your personal transition (if not already): You might want to personally reach out to contacts in the business community to let them know of your exit (e.g., a LinkedIn post thanking everyone for their support and stating that the company is in good hands with the new owner). This can provide closure and also signal that you’re open for whatever is next, whether it’s opportunities or simply that you’re taking a sabbatical.
Separate personal from business completely: Now that the business is sold, take care of any lingering administrative tasks:
If your name was on any guarantees (like a bank loan or building lease), confirm that those have been released or transferred. You don’t want to be on the hook for anything now that you no longer benefit from the business.
Transfer or cancel your business phone number/email if not part of sale (or set up forwarding as agreed).
If the business was paying for personal items (car lease, club memberships), get those onto your own account or close them, as appropriate.
File final tax forms for payroll or sales tax up to the date of sale, if that’s on you per agreement, or coordinate with the buyer on who handles what filings.
Manage the financial windfall: You may now have a significant amount of money from the sale. It’s time to implement the financial plan you crafted with your advisor:
Invest the proceeds wisely: Often, it’s recommended to park the money in safe, liquid accounts initially until you make long-term decisions. Don’t rush into risky investments or a new business until you have a clear plan. A wealth manager can help diversify into stocks, bonds, real estate, etc., to produce income for you going forward.
Tax payments: Consult your CPA immediately after the sale about tax obligations. Depending on timing, you may need to make estimated tax payments on the sale proceeds to avoid penalties (particularly if it’s an asset sale that results in ordinary income for some assets, or if the sale straddles a tax year). Calculate roughly how much you should set aside for taxes so you don’t accidentally spend it. If the sale was huge relative to your other income, you might also need to consider estate planning moves (the estate tax exemption etc. if your net worth has jumped).
Debt payoff and liquidity: If you personally had debts (a second mortgage, etc.), you might consider paying those off for peace of mind, depending on your financial strategy. Also consider setting aside an emergency fund for yourself separate from long-term investments.
Lifestyle adjustments: In the first few months, you may feel like you’re on a vacation or in limbo. Establish a new routine that makes you happy:
Take that well-deserved break. Immediately post-sale is a great time to decompress. Travel, spend time with family, pick up a hobby that took a backseat. You didn’t have much free time as an owner – enjoy it now.
However, some owners struggle with the lack of structure. If you find yourself feeling restless, create a schedule (even if it’s exercise in the morning, learning a new skill in the afternoon, etc.). Some structure can help ease the psychological transition from a super busy work life.
If you have a personal bucket list, start checking things off. It will remind you why you worked so hard to achieve this liquidity event.
Emotional well-being: The months right after a sale can bring a complex mix of emotions. You might feel relief that the pressure is off, excitement for the future, but also sadness or a sense of emptiness. It’s not uncommon to go through a bit of a grieving process – after all, you did, in a sense, “lose” something important (you sold it, but it’s gone from your daily life). Recognize this as normal: “letting go of something that has been a meaningful part of your life may bring on feelings of grief and sadness”. Allow yourself to feel that, but also focus on the positives (e.g., more time with loved ones, less stress, financial security). If you find yourself really down or anxious, talk to someone – a therapist or other former business owners who have gone through it. Sometimes just hearing “yeah, I went through that too” is hugely reassuring.
Stay connected (on your terms): You might miss your employees or customers – those relationships often feel like family. It’s okay to stay in touch socially if appropriate. Maybe you have a farewell or thank-you gathering with employees (depending on how the sale was communicated). Perhaps you meet a few loyal clients for coffee to thank them personally and give closure. Staying connected in a limited way can ease the sense of abrupt cutoff. Just be mindful not to interfere in the business’s affairs; interactions should be positive and not second-guess the new owner.
Avoid rash decisions: Post-sale life might spark lots of ideas – new businesses to start, investments to make, big purchases. Take it slow. Give yourself at least a few months (if not more) before making any major new business commitments. This helps ensure you’re deciding rationally and not just filling a void. Of course, if an amazing opportunity drops in your lap and you feel ready, you can go for it, but generally a short sabbatical is healthy.
Milestone: By six months post-sale, you should have successfully transitioned your duties to the new owner and started settling into your new lifestyle. Your finances should be structured for the long term (investments, taxes handled), and you’ve hopefully found a comfortable routine. The business you sold is hopefully doing well without you – which is a sign you prepared it correctly! Now it’s time to fully embrace life after the exit.
