Even though the company was not originally for sale, she concludes that "after contemplating the offer I'd received, I realized a sale was a way-albeit a drastic way-to get off of the proverbial treadmill. I was tired of neglecting my family, tired of managing employees and tired of working excessive overtime hours."
She doesn't regret selling the company, in spite of the incredible stress of negotiating the deal and putting in her time thereafter. "The sale provided me with a year off, while honoring my non-compete clause, to get my priorities in order, to make progress on my book and to recharge my batteries."
Ironically, there's now more financial planning in Cygan's future, as she has made the decision to launch a new "lifestyle/boutique" firm named Sage Future Financial with just 30 clients.
"Now I have an opportunity to return to financial planning and do what I love on a much smaller scale," she says. "After completing my non-compete clause in late 2009, I invited back a select group of my favorite clients. I have no desire to have employees or grow the firm, just to serve my 30 clients the best I can while also spending more time with my family, traveling and writing."
Cygan's Recommendations For Sellers
Keep your company "saleable" at all times. Get your accounting records in good order. Keep up to date on compliance requirements. Know your profitability ratios and work to constantly become more profitable. Focus on providing excellent client service so your client turnover is very low.
Put everything in writing in the legal agreement. Do not assume that verbal conversations will be honored.
Be aware of when you have leverage and when you do not. You have tremendous leverage before you agree to sell and virtually none after the fact. Think through the terms that are important to you on the front end. Understand that the new owner will take over at some point, and you will no longer have any control.
Recognize that you may feel disoriented after leaving your firm. Cygan says that she felt like a fish out of water during 2009. She missed her clients, but stayed tuned into the industry by keeping her professional association memberships active and attending conferences. Still, she says her routine had changed and this was much more difficult than she'd anticipated.
Expect to have some doubts along the way. "As soon as I sold my company I realized how much I would miss my clients," she says. Recognize that the firm you created will feel like your baby. You will feel very emotional as the new owner takes over.
Protect the amount of your payouts by being directly involved until you receive the last one. Unless you negotiate a fixed amount, this is extremely important. There might be unexpected challenges, such as a downturn in the stock market like the one that occurred in late 2008.
Use an expert attorney. Before Cygan's sale, she says, the buyer purchased a California investment advisory firm. The seller of that firm hired an expensive consultant and also got an investment bank involved in the transaction. There are many people who would like to be in the middle of these deals. "This seems like an enormous waste of money to me," she says. "I would cut out all of the middlemen possible, but a qualified attorney is essential."
David J. Drucker, MBA, CFP, is a frequent speaker at industry events. To learn more about his availability for your next event, contact him through www.DavidDrucker.com.