Donna Skeels Cygan, once a corporate marketing type in Chicago, launched her financial planning firm-Essential Financial Planning Inc.-in late 1998.
She started the firm and originally worked by herself in her Albuquerque, N.M., home, but later on found office space and by 2007 had grown from a one-person shop to a concern with four full-time staffers-including a junior planner.
If this sounds like a success story, it is, but not one without its pains. "My typical workweek was 60 hours," says Cygan. "I often went into the office at 5:30 a.m. and I worked every weekend. My husband, who also worked full time, was the major parent for our two daughters."
As much as she valued her clients and her company, Cygan increasingly felt she was neglecting her family. "I desperately wanted to make my family my highest priority. Yet when I looked at how I was spending my time, I had clearly given my clients and my company a higher priority than my family. To say I felt out of balance was an understatement."
New employees helped, but also added an element of uncertainty that sometimes forced her to work longer hours. "Although I seemed to be making progress at adding depth to my staff, whenever an employee quit, I would end up doing their job and working even more overtime," she recalls. "I often felt that I was taking two steps forward and three steps back." Building her employee base meant she had to add payroll expenses and computer equipment for each staffer, and that meant constantly adding more clients to pay for it all.
Perhaps this is a normal growth experience, but to Cygan it felt more like a treadmill. In late March 2007, she was approached by a consolidator interested in buying her practice, a company looking to buy independent advisory firms throughout the West and Southwest.
"I had received such overtures before, and I had always ignored them," she relates. "However, the buyer was the same firm that had recently purchased a friend's practice in Washington state; I recognized their name from my friend's comments during a conversation a few months earlier."
During the first phone call, Cygan told the consolidator her firm wasn't for sale. "I was only 49 years old, and although I was definitely heading toward burnout, I had not contemplated selling my firm at that time. I told them I considered it a compliment that they called and that I might be interested in selling in about eight years. They responded that they would like us to keep talking and that I could stop talking at any time because I was in charge. I realized I had all of the leverage, and I started seriously considering the terms that might convince me to sell my firm."
Over the next few weeks, Cygan spoke to the consolidator several more times about various issues. Even if she sold out, she wanted to work at least another five years. "They explained that they felt it was best to make a clean transition to a new advisor and that clients would be confused if the 'old' advisor continued to be involved. They wouldn't agree to five years, but they agreed to allow me to work one year during the transition. I realized later that one year would turn out to be one of the wisest terms of the entire sale."
Cygan had a junior advisor whom she'd mentored, and he was the obvious choice as her replacement. The consolidator wouldn't need to hire a lead advisor, and Cygan's clients would be less traumatized if she left behind someone they already knew and trusted. "I emphasized to the consolidator that this was an attractive feature, as was my firm's profitability, which I demonstrated in a one-page summary of my firm from year 2000 through 2006 with projections through 2011."