Owner(s) Sale Objectives

Owner(s) Sale Objectives, People Considerations, Strategy/Business Model

Entrepreneurship Through Acquisition (ETA) Thoughts From a Current Owner -It’s Worth It But…

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Fit is Narrower Than He Once Thought Part of preparing to transition your ownership is viewing your business through the eyes of potential buyers. Last week, I came across a post from Alexander Nadtochiy, President & Co-Owner of General Assembly and Manufacturing in Illinois, USA. With his permission, I wanted to share what he wrote because I believe you will find it both interesting and educational for both existing and aspiring business owners. Since I imagine most of you may not be familiar with Entrepreneurship Through Acquisition, I’ll begin by sharing a brief definition. Entrepreneurship Through Acquisition (ETA) is a path where someone becomes an entrepreneur by buying an existing business rather than starting one from scratch. A common version is the “search fund” model, where an entrepreneur (often called a searcher) spends time looking for a business to acquire, then operates and grows it after the purchase. Now here is the post as it was written: Three years ago, I bought a contract manufacturer in Northern Illinois with about 50 people and 40,000 square feet. After 20-plus years of operating experience, I became President and co-owner of my first entrepreneurial venture. It was a welcome change after 15 years in logistics and transportation and 5 in manufacturing, where I was running P&Ls and leading teams of 500-plus across multiple locations. Searchers ask me all the time whether buying a small business is worth it. Here’s the real answer: it depends almost entirely on whether you are the right fit, and on whether you buy the right business. That second half matters more than people think. The worst-case scenario in ETA isn’t failing to buy a business. It’s buying the wrong one, and the gap in damage between those two outcomes is not close. Three years into co-owning my firm, I still believe ETA can be one of the most rewarding paths available. But my view of who’s actually suited for it has narrowed a lot since I first learned about it during my MBA at Northwestern Kellogg. Back then, I thought anyone who was motivated, smart, and entrepreneurial could make this work. I don’t think that anymore. The Operator-Versus-Dealmaker Catch-22 This tension gets discussed, but it deserves more emphasis than it usually gets. To create value after closing a deal, you have to be a good operator. But to close in the first place, you need deal experience, credibility, financing, and the ability to navigate sellers, brokers, and lenders. Those are two entirely different muscles, and most people are not strong in both. A strong operator often needs help getting a deal across the line. Strong dealmakers can wire the money and then discover how hard it is to actually run the thing, which is arguably the more dangerous failure because now they own it. Long term, operating ability matters more, but that’s irrelevant if you can’t buy a business to begin with. Be Honest About Your Candidacy I see posts on SearchFunder from people frustrated that brokers won’t take them seriously. I get it, but often the broker is just making a practical call about whether you’ll close. If you haven’t run a P&L, operated in a similar environment, or built credible investor relationships, be realistic about how sellers, brokers, and lenders will read your candidacy. SBA financing exists, and there are creative ways to get deals done, but ambition alone doesn’t close anything. If the operating background, deal credibility, and capital aren’t there yet, the market tells you fast. That’s not cruelty; it’s information. The community here is supportive, which is one of its best qualities. But encouragement without realism can hurt people in the long term. Sometimes a broker isn’t dismissing you because the system is “broken”; he’s looking at your background and concluding you’re unlikely to close. That doesn’t mean never. It likely means that you need to build more experience, find the right business partner, lock down committed capital, or narrow your search to a space in which you truly have an edge. Make Sure You Want the Actual Job Some people are drawn to ETA because they want to be President or CEO: the title, the autonomy, the LinkedIn update, and the ability to say they bought a company. I understand it; ownership is a real milestone. But the novelty wears off fast. Pretty soon you’re not “the CEO” in the abstract. You’re the person handling a quality escape, a late shipment, a difficult employee, a supplier who let you down, a bank covenant, an angry customer, or a facility problem that nobody else can solve. If what you actually want is the title and prestige, this path will disappoint you quickly. You have to want the job that comes with running the business: the responsibility, the ambiguity, the unglamorous work, and the pressure of being the last stop. If you’re doing it for the announcement, the business will expose that in a hurry. The Reality Check I run a 40,000-square-foot assembly operation. It’s a solid, presentable plant, but it’s no gleaming corporate headquarters. It’s full of real people, real equipment, real problems, and real crises. When consultants, executives, or MBA grads visit, especially ones used to polished offices, I can sometimes watch the question form in their heads: Is this what I’d be doing every day for the next five to ten years? For a lot of them, the honest answer is no. That’s not a knock on them; it’s just a matter of fit. ETA in manufacturing, as well as a lot of service businesses, isn’t for people who need convincing that they will enjoy walking the floor, working with blue-collar teams, and living inside the business. If you have to be sold on that life, it’s probably not your path. I graduated in a Kellogg cohort of 77 students. When I first learned about ETA, I figured each cohort might have two to five people genuinely suited for it. I’m more sober now: I’d say one or two. Not

Business Continuity, Emotional Readiness, Negotiations, Owner Conversations, Owner(s) Sale Objectives, People Considerations

Owner Conversations: The Third Dimension Scenario That Will Consume Your Retirement if You Ignore

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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

Emotional Readiness, Owner Conversations, Owner(s) Sale Objectives

Owner Conversations: “Life After the Deal: The Unexpected Personal Lessons Owners Learn After Selling Their Company”

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Learning From Conversations Podcast Host: Welcome back to the show. Today’s conversation is a little different. We’re talking about what happens after the transaction, after the congratulations, after the wire hits the account, after everyone tells you that you’ve reached the ultimate definition of success. My guest today is a 64-year-old entrepreneur who sold the company he built after decades of hard work. It has now been 14 months since the sale, and he’s here to talk openly about something many owners don’t spend enough time thinking about: what happens when the company you built is no longer yours. Thanks for joining us. Frank: Thanks for having me. I think this is an important conversation because when you’re building a company, almost everything is focused on the business, growth, employees, customers, solving problems, creating value. The idea of selling becomes this finish line. But what I’ve learned is that selling the company isn’t the finish line. It’s actually the beginning of a completely different chapter, and I don’t think I spent enough time preparing for that chapter. Podcast Host: Let’s go back to the day after the transaction. You had accomplished what many entrepreneurs spend their entire careers working toward. What did you think life would look like? Frank: Honestly, I thought I had it figured out. I thought, “I’m going to play golf six days a week. I love golf. I’ve always loved golf. Finally, I’ll have the time.” But what I realized was that my relationship with golf was different when it wasn’t a choice, when it wasn’t squeezed between business meetings, customer visits, and responsibilities. During my career, I probably only played about one round a week, and many of those rounds were with customers or business relationships. Golf was connected to the business world. After I retired, I had unlimited time, but I didn’t necessarily have unlimited motivation. I found that I wasn’t motivated to playing six days a week. Sometimes I play a couple of times a week. That was a surprise. Podcast Host: Why do you think that happened? Frank: I think I underestimated how much purpose came from the business itself. The company wasn’t just a job. It was my identity. It was relationships. It was challenges. It was waking up every morning knowing there were problems to solve and people counting on me. For 38 years, I had a reason to get up. Now, I can sleep later if I want. Nobody is waiting for me to make a decision. Nobody needs me to solve the problem of the day. And while that sounds great when you’re working 70-hour weeks, when you lose that structure, you realize how much energy came from being needed. Podcast Host: You mentioned before the show your wife wanted to travel more, and you’ve done more traveling together. How has that transition been? Frank: Actually, it’s been good. My wife always wanted more travel, and we’ve definitely done more of it. The challenge is that travel means different things to each of us. My whole career involved a tremendous amount of business travel. Airports, hotels, meetings, being away from home, I did that for years. So when I retired, I was thinking, “I finally get to be home.” My wife was thinking, “Great, now we can go everywhere.” (Laughs) She loves exploring new places. I enjoy it, but I don’t have the same appetite for it because I spent so much of my life traveling. Podcast Host: You’ve also talked about how your wife has adjusted to having you around more. Frank: Yes, and that’s been an interesting part of this transition. For years, I was gone a lot. She had her routines, her friends, her activities. Now I’m home much more. She loves me being around, but I think the reality is that going from having your own separate rhythms for decades to suddenly sharing almost every day takes adjustment. She has weekly groups and activities with friends, and sometimes she feels guilty leaving me home alone. I keep telling her, “Don’t stop doing those things. You need your friendships and your independence.” But I understand why she feels that way. We’re both learning what this new version of life looks like. Podcast Host: You mentioned mornings have been difficult. What does a typical day look like? Frank: The interesting thing is I still do things I’ve always done. I get up early. I take our dogs for a three or four mile walk every morning. That routine has stayed with me. But I’ll admit there are mornings where I wake up and think, “What am I really getting up for today?” That’s something I never experienced when I owned the company. There was always a mission. Now I’m trying to create a new one. Podcast Host: Do you miss the business? Frank: More than I expected. I miss the challenges. I miss the people. I miss the employees who were part of the journey for years. I miss sitting across the table from customers and solving problems. You spend decades building relationships, and then overnight, you’re no longer part of those conversations. That’s been harder than I anticipated. Podcast Host: Looking back, do you think selling was the wrong decision? Frank: I wouldn’t say that. The transaction was successful, and I’m grateful for the opportunity. But I do question the mindset that led me there. There was a lot of outside messaging: “You need to sell now. The market is strong. This may be your last opportunity. You need to maximize your value.” And I listened. What I wonder now is whether I was making the decision because it was truly what I wanted, or because I was trying to meet other people’s definition of success. Was I trying to prove something? Was I trying to show the world that I had made it? Those are questions I’ve thought about. Podcast Host: Do you think you could have continued running the company longer? Frank:

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