What Are You Doing the Monday After It Closes?

This is the question owners answer worst, and it changes the deal more than almost anything they negotiate.

Not because the answer has to be impressive. Because an owner who has not decided cannot negotiate for what they want, and a sale is the one transaction where nobody else will ask.

The answers that work do not look alike

Someone is starting the next company and has wanted to for three years. Someone is moving back to the town they grew up in. Someone has grandchildren who are six and eight and will not be six and eight for long. Someone is taking two or three board seats to find out whether they prefer advising to operating. Someone is teaching. Someone has decided, deliberately, to do nothing at all for twelve months, and has worked out what that costs and can afford it.

Two of those are more work than running the company was. What they have in common is not leisure and it is certainly not age. It is that the person chose in advance.

The answers that do not work

I’ll figure it out. Honestly, I’m just tired.

Both are understandable and neither is a plan. The pattern is well known to anybody who has watched enough owners through this. The ones with nothing to go to are the ones who struggle afterward, the ones who renegotiate their own consulting agreement into a full-time job they resent, and the ones who buy something else a year later without really meaning to.

Why it is a deal term and not a feeling

Here is the practical part, and it is the reason this belongs in a post about selling rather than in a post about retirement.

An owner who wants out completely and an owner who would happily stay three years want different buyers. Different structures. Different earnout terms. Different answers to what happens to the management team.

An owner funding a new venture needs cash at closing in a way that an owner funding a quiet decade does not, and that single fact reorders everything: how much deferred consideration is acceptable, whether a seller note is tolerable, what an earnout is actually worth to them, and which of two offers is better.

You cannot negotiate for what you have not decided you want. Buyers propose structures that suit buyers, and the only thing that makes a structure wrong is a goal it fails to serve. Without the goal, every structure looks like a detail.

The transition clause is where this gets expensive

Somebody has to bring the buyer up to speed on a company they have only read about, and the purchase agreement will say something about who.

An owner who has not decided what they want their next year to look like signs that clause as boilerplate. A vague transition commitment is an unspecified amount of work, for an unspecified period, for somebody who now owns your company, and it is only vague because nobody on your side had a view about it.

The owners who end up resenting the first year after closing are usually not the ones who got a bad price. They are the ones who agreed to stay without ever deciding whether they wanted to.

Turn it into written goals

The personal answer becomes a short list of specific transaction goals, and the specific ones are the ones that get achieved.

A properly formed set reads like this: a total price with a stated minimum in cash at closing; advisor fees budgeted as a cash cost at closing and calculated on the full price including anything deferred; a creditworthy buyer, which matters more than usual if part of the price is seller financed; a closing date; confidentiality held to a named list of people, with two specific customers who must not learn of it during the process; and revenue and profit staying on budget through closing.

Most owners leave out the cash-at-closing minimum and the fee line, and those two interact. If part of your price is a note or an earnout and your fees are calculated on the whole price and paid in cash at closing, your closing-day cash is lower than the headline by more than you expect. That is math to do before you sign a letter of intent rather than during closing week.

The one thing the market decides

Goals are not wishes and the market has a vote. What buyers are paying for companies like yours this year is not something preparation overrules, which is why establishing a defensible view of value comes before fixing a number in your head.

What your goals do govern, almost entirely, is everything else: the structure, how much arrives in cash, who ends up owning it, what happens to your people, how long you stay, and what the process does to your life while it runs. None of that is set by the market. It is set by whether you decided in advance or found out as you went.

What getting it wrong costs

You are paid once, on a single day, and then you watch what happens for the rest of your life.

An owner with no answer to the Monday question is making that trade on the buyer’s terms, because every term that touches their life after closing is a term they have no position on. The price might be fine. The year after it usually is not.

More on this: Write Down What You Want. If It Says “Sell,” Start Again..

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This is what we do. Prism Edge starts with what you are trying to accomplish and turns it into the written goals the whole process is then run against: the cash floor, the fee treatment, the confidentiality list, the transition terms, and the date. Then every offer gets measured against that document rather than against the last offer.

The full chapter on what you are actually trying to accomplish, and how it becomes a set of deal terms, is in The Business Sale, free to download here.