The road to a Happy Exit

Selling your business is an emotional roller coaster. So make sure you have a 'Happy Exit' plan, so you get the maximum financial and emotional return from your sale. 'Everyone around you thinks you are obviously happy, since you have cashed in.'

'Did you know that only fifteen percent of all entrepreneurs make an exit that they look back on with pleasure afterwards,' business and exit coach Eelco Smit immediately quotes from American research. 'That's very little. So in other words, 85 percent of all entrepreneurs find themselves empty-handed after decades of hard work. Literally and figuratively. Empty hands in terms of money and/or empty hands in terms of happiness. And it would not surprise me if the percentage of unhappy exits in the Netherlands is even much higher.'

Smit knows what he's talking about. As part of his work as a coach, the Amsterdam native guides entrepreneurs in their business sale. He gained transaction experience at Deloitte and KPMG Corporate Finance, among others. The lessons Smit learned as an M&A professional and as an independent entrepreneur he now conveys to his clients as a coach.

According to him, a business sale is relatively simple. Sure, things like optimizing working capital, making the entrepreneur redundant or better customer distribution are certainly part of it. But for a true "Happy Exit," it is essential to pay attention precisely to the emotional side of it.

Smit: " Selling a business is largely about emotion. For me it is about guiding an entrepreneur well long before the signature is made. Because the process of sell a business is a long and emotional roller coaster. What good is a bag of money if you are deeply unhappy?'

Selling happiness

Monique Delsink and her (then) husband Johan Spierings also found out that a business transfer can be tough. The duo started De Bedrijfspoli in 2005, a regional health and safety service in Nijmegen which eventually employed 22 doctors and employees to run prevention programs. Over twelve years, the pair built the business, but they felt more like managers than entrepreneurs. So time to put the company in the shop window, and in 2018 they sold The Company Clinic to private equity investor 4D Invest & Management.

Delsink wrote the book Sales Happiness about her business transfer, a do-book on how to mentally prepare for a sales process and ultimately be and stay happy before, during and after the deal. 'Indeed, what struck me was that a lot is written about the business side of a sale, but quite little about the emotional aspect of it,' Delsink explains. 'It's not easy to sell your 'baby.' I had a lump in my throat when we told our employees, and the time after felt like a period of mourning.'

In fact, Delsink wishes she had had a coach like Smit during the sales process. She had hired an acquisition advisor to prepare her company for the technical aspects of the sale. But getting herself emotionally ready to sell was an entirely different story. Says Delsink, "Our sales process took a year. And for a year I put on a little play toward my employees, you're actually fooling them. You carry a secret with you that you can hardly share with anyone, I found that very tough.'

Meaning, identity and status

For Delsink, a period of mourning began immediately after the business sale. In addition to her relationship breaking down, she also had to get used to being an entrepreneur. The fact that she said she had "absolutely no function" anymore weighed heavily on her. So writing her book was a way to cope with the transfer of her business.

'For me, that was the most emotional moment of the whole business sale,' says Delsink. 'You have to let go of your business, let go of your employees. As an entrepreneur you have the idea that your employees are your friends, but I noticed that they also follow the new owner in no time. And that new owner then turns left, while you have always turned right. That also made me insecure; why didn't we see those opportunities and did we do it wrong all this time? After signing the contract, the real emotions kick in. Fortunately, after the mourning phase you eventually see things more objectively.

Smit, also author of the personal development books Book for Men and The Rules of the Game, recognizes this scenario with many of his clients. 'In my view, when you sell a business, you can cross out three things: your sense of purpose, your identity and your status,' he explains. 'I prepare business owners to lose their sense of purpose. They need to start emotionally distancing themselves from their staff. And start thinking about what life without the business looks like. Because after an exit, they are no longer "the great entrepreneur" who has built a successful business, but just someone with a bag of money. I also let them discuss that with the family, because this reduction in status in society also affects their family.

Not yet ready to sell

That a Happy Exit is right in the preparation proves the story of Friso Klapwijk. In 2017, he founded his business MetroPolder, a startup dedicated to urban water management and rainwater recycling. Rainwater is seen as waste in many urban areas. This is because cities are primarily designed to dispose of water as quickly as possible, but climate change threatens to run out of water in cities. MetroPolder provides water storage on flat roofs. To that end, Klapwijk has developed a technology to capture water and make it reusable for cooling, recycling and irrigation to combat heat stress in cities.

In the Netherlands and far beyond, there was interest in MetroPolder's concept. But with a team of just seven, Klapwijk couldn't handle all the orders. So in 2021 he decided to start a search for a strategic partner for more clout, in exchange for a minority stake. He found it in Wavin, a producer of plastic pipe systems that also focuses on developing and supplying products that contribute to keeping cities livable.

Klapwijk: "During the process with Wavin it became increasingly clear to me that the scenario with a minority stake would not be workable. And I also saw opportunities to make our concept part of a bigger story. That's how we ended up with a total takeover.'

Although Klapwijk describes it as a logical step, he mainly had to get used to the idea of selling his business mentally. He was still building his business, but now "all of a sudden" a buyer was standing on his doorstep. He was not ready, and MetroPolder itself was not ready to sell. That became painfully clear during the due diligence.

'Four of the seven employment contracts were different in structure,' Klapwijk explains. 'The service contracts were in place, but there were different versions in our administration. That kind of thing wasn't a problem for us, but is reason for suspicion for a buyer. And that did quite something to me. I had a hard time swallowing it at first. Moreover, I thought: after the non-binding offer we are there, but then it just started. Wavin had more lawyers on it than we had employees. Countless conversations, again supplying information, again answering the same questions.... I thought: they are completely crazy. After the deal I was off for two months, completely drained from that process. A sales process can also be beautiful, but for me it was especially stressful because I was totally unprepared.

Happy Exit

To realize that Happy Exit, Smit says there are two starting points: maximum emotional and financial return. And what that means in concrete terms differs for each entrepreneur. But the coach lists the three most frequently mentioned goals: the feeling of a fair price, the thought that the business and employees are left well behind and the fulfillment of a new life goal, so that the entrepreneur is still happy years after the exit.

That new life goal was clear to Klapwijk: continue with the mission to recycle rainwater in cities. Under the umbrella of the buyer. Klapwijk: "I realized in time that I can make more impact with MetroPolder under the Wavin banner. I notice that many entrepreneurs don't feel like thinking about selling their business. Neither did I at the time. But it's better to put that willfulness aside for a while. Because at the end of the day, it's not about you as an entrepreneur, it's about your business. Just like you should ask yourself in time why you want to sell your business. Is it to get as much money out of it as possible or because it will be better off in the hands of the next owner? In my case, it was the latter.

It was important to Delsink that all 50 employees would be in good hands with buyer 4D Invest & Management, something she did not take for granted beforehand with an investment company. 'I did fear for a while that they would buy it up and strip it down. The basic assumption was that after the sale I could walk down the street with a straight back and still talk to former colleagues at the Nijmegen Four-Day Walk with a beer in my hand. That was much more important than a high sales price.

Through her book Selling Happiness, master classes and e-learning modules, Delsink tells the story she believes many entrepreneurs face at some point. 'I want to show that a business sale is not just a celebratory milestone with champagne, but an emotional roller coaster full of fear, frustration and longing. Everyone around you thinks you'll be fine since you've cashed in. But believe me, that's not where the real happiness is.'