I met recently with a client who is transitioning his business. He’s a good man. He’s thoughtful and concerned about his employees – almost to a fault. He is generous, ethical and wants to do the right thing. So as we talked about preparing his business for sale some of his concerns pertained to the ‘correctness’ of selling his business as it related to employees. Some of them have worked for him for many years and have been loyal and contributing members of the team. “What would they think about me selling and leaving them behind?” he wondered. “Many of them have stuck with me through the tough times and I would feel like I was abandoning them.”
I respect his conscientious perspective. He’s a man who gives his employees more vacation time than he takes himself. He gives raises to others but hasn’t increased his own pay for several years. He would like to begin taking more out of the company, but part of his motivation is to give more to his church. He’s a nice guy.
But at the same time, he is undervaluing the contribution, the risk and the leadership responsibilities he has had to assume as the owner of a successful business. While he understands it at an intellectual level, something inside him thinks that any show of ‘success’ would make him appear greedy.
In addition to being a thoughtful and ethical individual, I think he may be suffering from imposter syndrome. While he rationalizes his behaviours from an ethical context, he is reluctant to acknowledge and display any signs of the financial success he has achieved. There’s an interesting blog and discussion site about this here.
He’s not alone. Many business owners have risen to success beyond their original dreams. They have worked hard, developed a strategy for the organization, hired good people, demanded quality work from themselves and their employees and as a result, may now be sitting on a business that is worth millions of dollars. How do they feel about that? Some of the questions on their mind might be:
- What percentage of the business value is truly mine? I wouldn’t have this if not for my talented and loyal employees. What do I owe them?
- How will my employees manage if I’m not here? Will the new owners treat them with respect and dignity and recognize the contribution they’ve made over the years, or will they be seen as dinosaurs?
- I’ll be taking care of my pension with the sale of the business. But many of my employees don’t have any pension at all. Is that fair?
- Should I share my good fortune with others? What charities should I support?
Many business owners will argue that they deserve all the success they’ve achieved. They put their house on the line, gave up many of the securities, amenities and comforts that employees have enjoyed over the years in return for a deferred reward. They created jobs, paid immense taxes, suffered the bureaucratic hassles of government officials, worked 70 hour weeks, sacrificed their free time and in some cases their families in order to make the business work.
On the other hand, some entrepreneurs have been quite generous in sharing the wealth. They give huge bonuses, favourable share purchase options, and build wings on hospitals. Still others will end up in a quandary because while they might wish to share the ‘wealth’, there may not be that much to share after they’ve paid their taxes, the business broker, the lawyer, the accountant and other advisors and the outstanding loans.
Is selling your business an ethical decision? There are certainly ethical dimensions to the process and how you go about it. But not selling your business raises other ethical questions as well. Are you still the best person to drive the business forward? Are you holding back employees that could take on more responsibility? Are you doing the right thing for your family, for your health, for your personal well-being? Only you know the answers, but the questions are worth considering as you get closer to the time to transition yourself and your business.