John West is a serial entrepreneur in the truest sense. Ahead of his latest startup, he previously already built and sold two companies in completely different industries. And he says that while developing a concept to start out a business does take time, selling that same business is simply as complicated.
West started building Whistle Sports Network in 2008 after selling his second company, Silver Oak. Following the Silver Oak sale, he made a decision to spend time along with his children. As his children started watching sports, he began to observe that the media coverage, content and delivery weren’t aimed toward younger generations. West began to research the media industry and made a decision to launch a linear cable network. Today, Whistle Sports has 315 channels and 115 million aggregate fans and followers.
Throughout a sale, companies have key financial and emotional considerations, like determining what to do after they don’t own that business and creating a personal financial plan. As the lump sum from a sale could be life-changing money, it’s secondary to the task as a business owner, according to West.
“I’ve never believed you should take up a company to market it,” says West. “You take up a company to resolve a problem and take action cool. You sell it predicated on the way the markets are doing and the way the industry does — you can’t plan this.”
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Nadia Allaudin, senior vice president of Wealth Management at Merrill Lynch Global Wealth Management in Century City, agrees and says that "there has to be a knowledge for the impetus for the sale or walking away. There has to be a whole lot of conversations about how exactly you’re likely to handle this.”
Once a business proprietor receives an offer, whether expected or not, that’s when the look begins.
West started his first company, Enstrat, an environmental consulting firm, out of college in 1989. Immediately after graduating Harvard Business School, he sold the firm to an associate of his managerial team in 1996 because he wished to make a change.
“The business enterprise was profitable, so we could actually finance the sale through debt,” says West.
Many companies can be purchased to key employees since these folks know and understand the business enterprise and also have a passion for this.
“Entrepreneurs should consider that when they’re recruiting people and consider grooming employees, given that they may be the visitors to dominate your business in a couple of years,” says Tim Sabol, private wealth advisor at Ameriprise Financial in Philadelphia.
In 1999, West continued to build Silver Oak, a company that helped state governments cut costs. His company created a distinct segment and was earning about $23 million in revenues. After eight years, he accepted an offer from CGI in 2005. 3 years later, he started Whistle Sports. Deals may take up to a couple of years to close, which may be used to arrange for what’s next.
“Usually, how long [a sale] takes depends on who the customer is — if it’s an interior candidate or a competitor outside — and it always appears to take longer than people expect,” says Sabol.
Leaving a business requires understanding their value and worth. You might need multiple valuations based on the buyer, nature of the business enterprise and the offer. Having clear books and records helps a buyer with homework, and you intend to have years of financials easily available so you’re prepared for that unexpected offer.
“There are a great number of different business valuations companies, and you intend to find one that’s reputable and specific to your industry, so they know your business and the money flow,” says Laurie Barry, wealth advisor at UBS Financial Services in Chicago.
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Within the Silver Oak sale to CGI, West stayed with the business for 18 months to control the integration of Silver Oak in to the bigger business and focus on special projects.
“Frequently, the business wants you there to shepherd your old employees in to the new system,” says Sabol.
If you’re asked to remain, inquire about the distance of the commitment and the expectations of this position since this will affect your own future plans.
“Be sure to know very well what those parameters are,” says Barry. “In the event that you don’t want to remain on, what exactly are the effects of those aswell. That’s important for the business enterprise owner.”
Everything you plan to do with your own time and how your daily life will look is really as important as the financial facet of leaving your business. After selling Enstrat, West moved to NY to are a management consultant. When that firm was sold, then started Silver Oak.
“I knew I needed to do something by myself, so I developed the theory for Silver Oak on napkins and planned the cover the business,” says West.
After selling Silver Oak, since he previously started a family group, he put half of the sale proceeds towards college funds and his retirement. Once he started Whistle Sports, he invested the others in to the seed round. He also had to cover the years that he didn’t have a salary on the way. For most serial entrepreneurs, what’s next isn’t to just go take a seat on the porch, at least not for quite a long time. And it’s tempting to utilize the entire lump sum for a fresh business.
“Do some analysis to determine just how much of the proceeds you should reserve for retirement, and with the total amount of the proceeds, consider just how much you can risk for another deal,” says Sabol.
Although some companies have a vision for how to proceed next, others should take some time to determine next steps. In the event that you don’t have an idea, rediscover strengths and build your network to create a transition into something new easier. Make sure to cover these expenses, since just rolling with it often doesn’t work.
“When you’re a business owner, it defines a big little bit of your identity, so when that goes away completely, it’s definitely a transition,” says West. “I didn’t appreciate that after selling the first company, nevertheless, you have to find another thing to spotlight."
“Look for a good group of advisors who you work very well with and can offer you great advice,” says West.
Corporate accountants, lawyers and investment bankers might help shepherd your company through a sale, and an individual accountant and attorney can help with your own personal financial planning when you do receive that lump sum. Create a team of individuals who invest in your business as if you do because as a business owner, these people can help determine your success.
“In the event that you surround yourself with capable people who have different strengths and weaknesses, you can find around any obstacle,” says West. “That sounds type of cliché, but it is the absolute difference."