Emotional Readiness

Attorneys and investment bankers explain the terms, structure, and risks of a transaction, but few share what it’s actually like to live through the experience after the deal closes. Podcast Host : Welcome back to After the Keys podcast, where we talk with entrepreneurs about the decisions, risks, and lessons behind building and transitioning out of a company. Today’s conversation is about what happens after the celebration, after the closing documents are signed, and after an owner thinks they have finally reached the finish line. My guest today is Susan, a woman who built a successful food manufacturing company, grew it into a $22 million revenue business, and sold it four years ago. After 28 years of ownership she thought the sale would give her the freedom to spend more time traveling with her husband and enjoying the next chapter of life. But the reality turned out to be much more complicated. Susan, thank you for joining us. Susan (seller): Thank you. I appreciate the opportunity because I believe my experience is valuable to other business owners who are considering selling but don’t always understand what life looks like after the transaction. Podcast Host: Let’s start there. You sold your company to someone who wasn’t a stranger to the industry. In fact, the buyer was an industry president who had successfully run a $500 million revenue food manufacturing company. That sounds like the ideal buyer. Susan: It did. And that was one of the reasons I felt so confident. This wasn’t someone coming from outside the industry trying to learn the business from scratch. He understood food manufacturing. He understood customers. He understood operations. He had a proven track record leading a much larger organization. So, from my perspective, I thought, “This company is in great hands.” And honestly, I still believe he has the capability and intelligence to succeed. What I didn’t fully appreciate was that running a $500 million company and owning a $22 million company are two completely different experiences. Podcast Host: Explain what you mean by that. Susan: In a large company, even a very successful executive has layers of support. There are people handling human resources, finance, operations, purchasing, quality, sales strategy, recruiting, and all the daily fires that come up. When you become the owner of a smaller company, suddenly you’re wearing multiple hats. You’re not just the president making strategic decisions. You’re also dealing with an employee issue that morning, the customer concern that afternoon, the equipment problem, the cash flow question, the staffing challenge. Those responsibilities consume time. And I think that transition was harder than either of us expected. Podcast Host: You had an earn-out as part of the transaction, correct? Susan: Yes. The earn-out was 12% of the deal. And when we structured the deal, I understood the basic concept. If the company performed at certain levels, I would receive additional payments.  The attorneys and advisors explained the mechanics. They explained the targets. They explained the structure. But what I didn’t truly understand was the practical risk. The earn-out wasn’t just about whether the company was capable of succeeding. It was about whether the new owner could execute the plan, manage all those additional responsibilities, navigate unexpected challenges, and still hit the performance goals outlined in the agreement. Those are very different things. Podcast Host: That’s an important distinction. The business may have been strong, but the transition itself created new variables. Susan: Exactly. The company had a great foundation. We had talented people, strong customers, and a reputation built over many years. But ownership transition is its own business challenge. The buyer had been successful at a very high level, but this was a different environment. He was moving from leading a large organization with extensive resources to personally carrying many more responsibilities. And those extra hats took time away from some of the very things needed to achieve the earn-out goals. Podcast Host: Then there was the seller financing component. Susan: Yes. The seller note was 20% of the transaction. At the time, I viewed it as a positive. It demonstrated confidence in the buyer. It helped bridge the transaction. It gave me additional value beyond the initial payment. But again, I didn’t fully understand how it would feel to become the lender after you’ve sold your company. Emotionally, you have moved on. You’ve handed over the keys. You’re supposed to be entering retirement or your next chapter. But financially, you’re still connected. Podcast Host: And the original repayment timeline has changed significantly. Susan: Yes. The original expectation was a five-year repayment period. Going into year five now, it looks much more like a nine- to eleven-year repayment timeline because of multiple renegotiations and adjustments made along the way. The economy slowed down. The business faced challenges. The buyer needed exceptions to the original seller financing terms several times. And I understood why. I wasn’t interested in seeing the company fail. But every adjustment extended my financial uncertainty. Podcast Host: That’s a difficult position because you’re both a former owner and a creditor. Susan: That’s exactly right. You’re emotionally invested because you built the company. You want the buyer to succeed. You want employees protected. You want customers taken care of. But financially, you also have to think about your own future. That was the conflict I didn’t anticipate. Podcast Host: How did those challenges affect the company? Susan: The financial pressure created stress. The buyer lost some key employees along the way. And because I was concerned about protecting the value of the company and ultimately recovering the seller financing, I became involved in helping find replacements and supporting the transition. That was never part of my vision. I thought I would help for maybe six months after closing, help transfer knowledge, introduce relationships, answer questions, and then quietly step away. Instead, years later, I was still connected. Podcast Host: How did that affect your personal plans? Susan: That has probably been the hardest part. My