A Happy Exit is only for the happy few

Selling your company sounds easier than it is. Business coach and M&A advisor Eelco Smit has been guiding entrepreneurs through their exit for years and has experienced it up close: their dilemmas, their emotions and their doubts. 'Eight out of ten entrepreneurs fall into a black hole after the exit.'

How often is selling a business a success?

'According to American research, only slightly more than one percent of all entrepreneurs make a happy exit. That is sad. I don't know the Dutch figures, but there won't be very many more. With a happy exit, the entrepreneur receives a serious amount of money in his bank account, the people who have helped him to succeed - think staff and fellow entrepreneurs - are treated well, and there is a personal future plan to fill the black hole after you have lost perhaps the most important occupational therapy of your life. So you understand, a real happy exit is not for everyone.'

Is it so difficult to receive a serious amount of money?

'The amount received often disappoints many entrepreneurs in practice. Not that they will ever put that on the record. On the golf course, everyone received ten times EBITDA (earnings before interest, taxes, depreciation and amortization, ed.). But last year was an all-time low for the acquisition market, especially since interest rates went times four.'

What makes it so challenging to be truly happy after an exit?

'That is very personal. But those who have hung their identity on the business are the cigars after the sale. Never hang your personal identity on your business. That's my urgent message.'

You like to name things clearly?

'I am indeed not a type of business coach like so many others. When you work with me, sometimes you get raunchy feedback. Think of it this way: a bad entrepreneur does everything alone, a good entrepreneur gets coached, a top entrepreneur comes to hear the truth.'

What do you think is the prime example of a good exit?

'Champions League exit is when an entrepreneur does not sell his business, but remains a shareholder without further involvement. That exit without exiting is really an art in itself. Very few entrepreneurs can do that.'

And what is a bad exit?

'When you sell your company and shortly thereafter start doing exactly the same thing. I never understand that very well. Then you might as well have continued.' Then a business has been sold.

What is the emotional impact?

'At the end there is relief and sadness. So very conflicting emotions. I experienced them crying during the closing of the deal. A good deal is a thrill, precisely because so few people succeed. Well done, you say. But such a change - no matter how you look at it - is also a great loss. Loss of status and identity, for example: as the boss of your company, you were quite a gentleman. Now suddenly you are Koos Werkeloos with a big bag of money. That doesn't make most people happy. We are not made to play boules all day. In addition, while running their business, all those entrepreneurs created for themselves an ever-growing monster. They have had to feed that monster for years. Since muddling through is not an option, the business had to keep growing. When the company is sold, a big void is left behind. I think about eight out of ten entrepreneurs fall into a black hole after an exit.'

How do you avoid that empty feeling?

'Have self-compassion. Most entrepreneurs completely lack that. Self-compassion is the key. What entrepreneur gives himself a pat on the back? Real entrepreneurship is perhaps even more difficult than top sports. Because really no one at all is clapping for you along the sidelines. And your partner doesn't treat you like a top athlete either.'

During an exit process, people often hit themselves hard'

What do you advise entrepreneurs after an exit?

'Go away for a few months first. Go do something fun. Then work on your personal development and get new occupational therapy. During such an exit process, people often encounter themselves hard. Where did that proof drive to lead a firm come from? Especially in family businesses, a lot of personal misery is hidden. Why did someone choose the company: was it really their own choice? Or surely mainly to not disappoint his or her father?'

What do most entrepreneurs do with the bag of money they catch when they sell?

'Of everything. Publishing. Starting something new. Supporting startups. And, of course, investing. Stocks? Many pedigree entrepreneurs don't like that much: too little control. But anyone who twenty years ago had put their money in the S&P 500 (the stock index consisting of the 500 largest U.S. companies with Wall Street listings, ed.) will not regret it now. And real estate, of course -nearly all entrepreneurs go into real estate. Because that represents success: holding and leasing their business premises, buying and leasing other premises... All nice, but often not very challenging. Moreover: when investing, you have to diversify. Especially given all the political measures, you should never put everything solely into bricks. You can also lend with real estate as collateral. Then you quickly receive six percent. But above all do something you know about or can get good advice on. That can also be private equity, for example.

What would you do yourself?

'Personally, I would divide the proceeds from the sale - whether it is ten or a hundred million euros - at this time according to my own taste and knowledge between gold, real estate, loans, the S&P 500 and plenty of cash. Bitcoin is also possible, but at most by a few percent of the total. A big challenge these days is not having to hand over large sums of money to the taxman. No one wants to be picked on like a sitting duck. Furthermore: don't put money into anything without knowing how to get it out again. You also want a happy exit for your investments. Money you can't or won't miss, you shouldn't tie up for a long time. Hence my love of cash: maximizing returns is fun, but that's more for accountants. Because if that doesn't work out, that's going to keep you awake. In the end, everything is about financial freedom of movement. Because that is better for your sleep and essential for a sunny mood. And that's what it's all about in the end: a sunny disposition.