by André Staffelbach and Jo Staffelbach Heinz
In 1966 a dream developed into a mission, resulting in the start of Staffelbach. It soon became such an enjoyable experience that it completely engulfed my mind, my time and my energy. I enjoyed the challenges and opportunities so much that the notion of taking a vacation – much less retirement or selling the business were totally alien.
However, the firm’s continued growth required me to address the future, which brought about the great opportunity in 1985, to merge the business with Jo, who at that point had two offices in Kansas and needed to address the same issues I did. Her joining the team brought growth and unexpected business success that I would not have been able to achieve on my own. And over the course of the next 30 years we built Staffelbach into a nationally known and respected firm with a staff of 86 talented people.
But by 2016/2017, once again it was time to consider what might come next. No one within the firm had come forward to express a desire to “buy-in” and Andre had no children interested in leading the firm forward.
Our idea was to sell the firm to a larger firm – one that shared our goals and could allow us to move from a known national firm with some international projects to a fully international firm. We dreamt of the opportunities our staff could enjoy in an international forum that would expand their growth and advancement; being part of something bigger. We wanted to remain a part of the team but increase the potential for everyone.
Feeling that the time was right and that the firm was in a place that presented a certain window of opportunity, we selected a consulting company to assist us in identifying potential suitors or partners for our firm.
There is a definite need for a professional consultant/negotiator to represent you on the negotiating table with the selected buyer. To begin with, this professional will assist you in the preparation of paperwork, sales documents, etc. Once potential buyers are found they will coach you for your “mating dance” meetings.
This professional will research and find firms that may be interested in your firm, bringing these firms to your attention for discussions. Then if there is mutual interest, the consultant will set-up face-to-face meetings.
When the time arrives for the meetings with potential buyers, it’s important to recognize that as the seller you will have a mindset that is different from the potential purchaser. There is a creative mindset, and then there is a business/financial mindset and the two are very different.
Here are some important things to consider:
- Can your firm successfully integrate with the combined new firm?
- Will your long-term valued employees continue to be valued?
- Is an earn-out the right way to go or is it best to just sell?
- What role will you play?
- What role will your firm play in the combined organization.?
- How are your values perceived by the potential buyers?
- Is your firm’s purpose consistent with the mission of the newly combined company?
The future goals of each party will be different, and while some of those may be shared, others are only known to one of the parties at the table. You may also find that ideas and thoughts expressed during this time do not always paint a complete picture; which you may learn about at a much later date. So as the seller, moving into someone else’s organization it’s very important to get as clear a picture as possible of what that will mean.
There are many options for merging the two parties. Typically, the financial payouts will be structured, in one of two ways. Option 1, an earn-out over several years, or option 2, your departure as soon as practicable after closing. Each option has positives and negatives and whether one option is better than the other may depend upon how well you succeeded in understanding each other’s vision for the future during the negotiations.
In the case of an earn-out over some number of years, you may learn that it is difficult to become an employee after having lived the dream and created a successful firm from the ground up. The journey from an owner and leader to an employee and having to learn to work for a new leader is often one of the hardest challenges post-merger.
Your former long-term employees may not be happy with the new arrangement and not be appreciated by your new bosses as much as you appreciated them. There are always new and different stresses, pressures and an altered working/business relationship.
You will almost certainly learn of expectations that didn’t come up during the negotiations. The future goals of the firm and for you, as you understood them during negotiations may have changed, and you may find the goals you thought you shared are no longer adhered to.
Your long-term employees may be dismissed, because they are too costly, and younger ones can be hired for less money. You know the quality of the work that will be produced won’t be equal to what your team produced, but it may be your bosses’ financial decision, over which you have no recourse. On the other hand, finding that loyalties have changed can also be painful.
You may learn that the friendly smiling faces you sat across the table from at the negotiating table are no longer smiling. Expect new demands, new order of reporting, and financial demands. If your focus was on your clients and designing for them, as the creative leader you may not be much interested in the daily or weekly meetings you’re required to attend regarding parts of the business or goals that were never important to you before the sale.
Conversely, you may be happy not having to address the business aspects any longer, the personnel issues no longer keep you awake at night, and the finances are managed by others. Or you may end up depressed, as the joys and dream of being self-employed, even with all those problems, brought you pride and happiness. At that point you are beginning to think of a time to depart.