- The sale of a business can precipitate an existential crisis
- How advisors can help sellers through this emotional process
- Have a clear vision of your end goal after the sale
- A sale is not just a transaction
- Talk to someone who helps bring clarity and direction
- Our take-away tips for business owners and advisors
Joanna: Hi, it’s Joanna Oakey here and welcome back to the Deal Room Podcast – a podcast brought to you by our commercial legal practice, Aspect Legal.
Many of our past episodes have touched on a subtle yet recurring theme around the emotional challenges that sellers have to deal with during the sale process, and indeed buyers as well. In our experience here at Aspect Legal, the emotional side of selling and acquiring businesses must be something that the parties, and their advisors are aware of and alert for. Because if these emotions arise unchecked, they can have a real impact on the outcome of the transaction or worse, cause the transaction to completely fall over.
So today we reached out to Peter Diaz, who is a workplace psychology and mental health worker, and today with Peter we will explore the wide range of emotions associated with selling and acquiring businesses and offer some helpful tips in successfully navigating this somewhat emotional journey.
Joanna: Hi Peter! Thank you so much for coming on to the Deal Room podcast to chat to us today about this very interesting area.
Peter: My pleasure, Joanna. Thank you for inviting me.
Joanna: Great. Now look first I guess I want to give our listeners a little bit of a background to why we’re talking about this topic of psychology I guess behind people exiting their business and the emotional impacts just so that we can give a bit of background so our listeners out there understand perhaps why we’re traversing this subject area which is a little bit different to some of the things we normally talk about on this podcast.
But I was reading an article and you were quoted in this article Peter so I felt I had to reach out to talk to you about this and the article related to the emotional impact of business owners exiting their business and it’s certainly something that I have seen play out time and time again and I think it’s a critical thing for anyone who is involved in the sales and acquisitions industry to be mindful of as well as people who are the vendors or the sellers themselves to be aware of the fact that there can be an emotional impact of selling a business.
Now sometimes this doesn’t hit until you get to the point of the business having sold. But sometimes it hits much earlier in the process, and the issue with this and the reason why we need to be tapped into this as an issue I think is because it can really impact the sale process and certainly can make negotiations harder throughout the sale process when we have these emotional things happening below the surface which can make both sides, there can be emotions on both sides. There are certainly also emotions of people who are buying a business, right?
But today I particularly want to focus on the emotions of people selling a business and I think it’s really important for us to perhaps understand and be mindful of some of these emotional processes that can be at play in order that we as advisors can help support our clients going through this process because we understand perhaps some of the things from a psychological perspective that are happening behind the scenes and also for sellers themselves and for buyers to understand these emotions that interplay so they can be prepared for the process and for the things that might occur through the process so let’s kick it off Peter.
Before we started recording this podcast, you started talking about some of the issues that you have seen with the emotion that can be created from leaving a business. What are some of the issues that you’ve seen?
The sale of a business can precipitate an existential crisis
Peter: Look the biggest one that I’ve seen is a crisis. I call it a crisis of meaning. What does it mean not to have this business that has, this organisation has probably taken 70, 80, 90 hours of my time and then all of a sudden even if I’m very happy that I’m going to get a lot of money from it but money is just money. What am I going to do? Who am I going to be? There’s a crisis of identity as well. So what am I going to do with my life? What does this mean not to be the captain of the ship? But then also you know that identity if I’m not a captain of this ship, who am I?
Joanna: It is a really good point. As I alluded to in the beginning, I think business owners perhaps face this consideration often at different times in the process and it can then have a different impact depending on where they are in the process.
So firstly, it’s a change. It’s a change for a business owner from what they’ve been focused on for many years and being the driver as you say being the captain of the ship to perhaps now sitting back. Certainly, if they are looking to retire, now sitting in a position where there’s less people that they can boss around, tell what to do.
Peter: Yeah, that idea of if I’m not a leader, who am I?
Peter: You know retirement, a lot of men die very very soon after retirement because they have no meaning. And for some of these entrepreneurs, this organisation, it truly is their baby. Not literally, but they do feel that they have given a piece of themselves to this organisation and what are they going to do after that sale?
They may not talk about it in the acquisition meeting or the sale meeting. They’re not going to talk to people about this. But their behavior can be one of obstinacy, of stubbornness and resistance to the process. You may be sitting with them and thinking what they talk about is not logical, is not rational. What else is going on here?
Maybe what is going on is that they don’t know who they are going to be after the sale happens. So yes, they’re going to have the money. Yes, they’re going to have the reputation of having sold the business but so what? What are they going to do with the rest of their lives? Because they’re not there yet and for some people the sale of a business can feel like a death. It’s a psychological death. It’s an emotional death. It’s a letting go of something. That can be very hard, and I’ve seen that for some people. Other people, they just go away quickly. You know I can’t wait to get rid of this. But the majority is not like that.
Joanna: I’m going on holidays!
Peter: Exactly. I’m going on holidays. But then it hits them later Joanna. It hits a month into the holidays they go oh my God what have I done. What am I going to do? I can only have so much holidays. I can only drink so many piña colada. What do I do with myself?
Joanna: Although my quota for that is quite high.
Peter: Mine too!
Joanna: Sounds like a nice problem to have. Doesn’t it?
Peter: Yes. It does. That’s interesting. You know it sounds like a nice problem to have but it does precipitate people into an absolute existential crisis whether they are ready or not. Of course, if you’re ready for it, great! At least you know what to expect. You know what’s coming.
But if you’re not ready, it can be very very dangerous. People can go into very dark spaces, become anxious, depressed or on the extreme of things they can even contemplate suicide. And it’s interesting to see that after the ages of 65, the suicide rate in men goes through the roof in Australia.
I wonder how much, because I haven’t seen any research done to tie the two things together. But definitely there’s a crisis of meaning. There’s an existential crisis that comes after retirement and that’s usually when the sales happen. But it doesn’t have to be retirement. It could just be the sale of a business.
How advisors can help sellers through this emotional process
Joanna: I think this is really interesting in many ways. I think the first really important point of this is for advisors who are working with businesses that are approaching a sale or in a sale process, if they reach to a place of being quite obstinate with certain negotiations, what can sometimes be below that or under the surface is concerns, anxiety, issues, emotions that are appearing in relation to what their life will look like post this sale. As advisors, if we are able to understand some of those signs perhaps they might be some things that we can do to deal with that and I’ll ask you about that in a second Peter.
But I think the other thing is for advisors and for businesses who are listening in, I think us as advisors perhaps can provide a lot of value as well to our clients by maybe identifying this right in the beginning and helping to provide resources for them. I don’t know what resources are out there. Maybe we can explore that a little bit today as well in terms of talking about what prevention is out there and how we can make our clients aware of this and of course if you’re a business owner who’s listening in I guess just listening to this podcast in and of itself is a bit of an education about understanding perhaps some of the emotional processes that may appear.
So let’s talk first then about the situation Peter of an advisor working with a business owner, perhaps a business owner themselves, who hit a point where they’re suddenly becoming really difficult to deal with in a negotiation. Often what happens here is you know it might be particular clauses we see from a legal perspective. There might be a backwards and forwards in relation to particular parts of the deal in the contract. There might be particular components in relation to financial parts of the deal where initially the client had seemed like this is the way they wanted to play it but a robot comes their way and they are difficult to move or they don’t want to go ahead with the original plan.
We are now aware because we’ve listened to these podcast that maybe there’s an emotional issue, an emotional undercurrent. What do we do next? What’s the strategies for us as advisors? How do we dig into this and work out are there issues there for our clients and what do we do, if we identify that there are issues?
Peter: Good question. Good question. Of course, when we are working with human beings as advisors you know every single person is very different. But I think the best thing to do is to stop and take a deep breath. Wherever you are in the process, just stop. Take a deep breath and remind yourself you are dealing with a complex human being. There are undercurrents that not even herself or himself really truly understand. They might just need a little bit of time out.
I say to people; can you go for a walk together? Go for a walk. Change position, change the room. Do something spacial, very very practical because sometimes people get very stuck. If you see a person stuck, they’re usually either sitting down but they go inwards physically. They go inwards.
I mean you don’t think of a stubborn person expanding but really really contracting. If we get ourselves out of our chairs, go for a walk, get a cup of coffee, get a cup of tea or something that involves a bit of movement. That can be just the thing that gives it enough impetus to get people unstuck and they may start talking to you about what really is going on.
Talk about something else. Talk about the weekend. Break the attention to something else and come back to it later. It doesn’t have to be later in a matter of days but just break whatever is going on and show empathy. If you feel that there’s something else going on, say listen I have to say I truly admire you. If I had taken a business from like you’ve taken it from here to here, it would be really really hard for me to leave it behind. I don’t know, I don’t truly understand how you’re going to do it and they may go you know what I’m not sure that I’m doing that well in this matter. Something that connects your human beings.
Don’t think of my workplace, my room for advising people is just these four walls. Some people don’t operate very well in four walls. But even if they do normally, move out of that space physically and go into that aspect of empathy. Show that you understand to say look I would be completely lost I truly don’t know how you do it and see what happens.
Joanna: Yeah. I guess you know and it’s engaging them on a human level and I must say I think that’s a really interesting thing. Quite often from a legal perspective we deal with a lot of emotion but many lawyers I think find it very hard to transcend just the contractual discussions. And I must say I’ve had the best success where we find a personal connection and that really helps. I must say it also helps in developing a personal connection with the advisors who are working on the other side of the matter as well because together personal connections I think works through issues a lot better than getting stuck as you say and obstinate. I think there’s some really good points.
Move out of the space so maybe even go grab a coffee with your client. Meet them somewhere different that you can then show empathy, connect to them on a human level and this is interesting because this is not the sort of stuff we usually talk about as I’ve said before on this podcast. But we’re getting really touchy and feely here today aren’t we?
Joanna: I think it’s a really important component of this M&A area, human connection. It’s not just contract to contract. We’re talking about, no matter what the deal size, we’re talking about emotions on both sides of the deal that if we can transcend those issues we can go a lot further than simply dealing with emails backwards and forwards constantly.
Joanna: Even phone calls, you know the power of meeting up I think has a large element to play.
Peter: I completely agree with you. This does feel a little bit touchy feely but to me it’s about result. What result do you want? I mean do you want a no or yes? Do you want the thing to proceed or do you want to get stuck? So if you want it to proceed and the client is resisting you, you’re going to have to do something that you don’t normally do and touchy feely maybe the thing that you don’t normally do. In some professions the emotional aspect, the psychological aspect is not usually interesting or part of what they do but we’re dealing with people. Eventually, it’s something we will hit our heads against. So what do you do then? It’s better to be wise than sorry.
Have a clear vision of your end goal after the sale
Joanna: Yeah, and an aware! Really aware, I think that’s certainly one thing and also helping your client to become aware. Aware of why they are potentially having issues with making decisions that are needed to be made in order to move the transaction along.
I guess let’s move back then a bit, talking about the steps that we can take in order to maybe ward off these issues or try and prevent these issues from occurring in the first place. One of the things that I often do with clients and this has happened quite numerous times is we start our interaction with the client, if we haven’t dealt with them before in an M&A transaction, by having a discussion about what their outcome is.
But quite often having a discussion, that’s a face to face discussion which doesn’t have to be in person but you know it’s great to use technology these days if you can’t be face to face zoom or Skype or whatever it is, trying to drill just have a little discussion about them what they see the future post transaction as being because sometimes that discussion has picked up for me emotion that I can see occurring and so I am then aware and I’m on notice that we might have some of these issues occurring during the transaction.
So at least at the beginning, what I try to do is I try and then get a read on what the one element is that’s motivating them to sell the business. So there I get a read on their future plan or idea, whatever it is. Is it gardening, is it you know whatever and then as we hit road bumps in the process I’ll then drop in and remind them of some of these end goals, which quite often helps to move them through that emotional process. Am I doing it right or wrong Peter?
Peter: You’re doing a wonderful job. I’m not sure that you need. You’re doing a wonderful job. Yes.
Joanna: So maybe let’s talk then, brokers, M&A advisors, accountants, what does this look like for them? What can they be doing?
A sale is not just a transaction
Peter: Look, we are not talking about you know being so soft and treating people like they’re fragile. What we’re saying is get into the psychology of the other person. Get into their shoes, like truly get into their shoes. Not your shoes in their shoes but really their shoes and try to see their life from their perspective.
What is it that you see normally? When you look at life through your eyes, what do you normally see is that you are hugely aware of your own significance and you want other people to feel they are significant. I think the people that show incredible amounts of respect and (no, respect is the wrong way) honor for another human beings tend to be the ones that do well in relationships.
At the end of the day, a sale should be a relationship not just a transaction. The moment that we just see a sale as a transaction that’s when we can run into problems especially when we’re talking about something as big as selling your business or your company that you’ve worked on for so long and then you don’t know what you’re going to do later on. Some people may say well that’s none of my business, my idea here is just to buy a business that’s all I’m doing. Yes, if they let you. If the other person says no, you can’t buy it. So it pays to be considerate so you’re doing a great job.
Joanna: I’ve been in this game for long enough to know that the stakes are high if you’re dealing with someone who hits these emotional road bumps and isn’t themselves aware of why they’re hitting them. Sometimes it can even lead to transactions completely falling over. But certainly, it can create longer transactions, longer lead times, longer times till you know there’s M&A advisors and brokers who are only paid on completion so of course it can be very aggravating for them when these sorts of things pop up.
But I think sometimes what happens then is their own emotion of wanting to get a deal finished now creates tension between the seller and the person who they had engaged to act on their behalf because they’re now. Sometimes what happens is that they now suddenly feel that they’re getting pushed into something that maybe they aren’t sure if they agree with entirely because there’s these competing requirements of an M&A advisor or broker trying to close the transaction and the seller suddenly having these emotions that they hadn’t perhaps anticipated. So it certainly in all advisors best interests to be aware of what can happen if they push too hard as well I think.
Peter: Absolutely, yes. You’re completely, 100% correct. Nobody cares about what I want. They care about what they want. And if I manage to at least care a little bit about what they want and truly care to some degree and be able to express that, I have a friend for life, and my friend will want to benefit me the same as I want to benefit them. So yes, it’s a win win situation. The moment you get an advisor that manages to get to himself this space in which they care about this person not just their transaction, then things flow much better. I have not seen a single person in my life that doesn’t work that way.
Joanna: Yeah. It can sometimes be about trust. In many of these transactions they’ll sometimes last for quite a long period of time and there’s a relationship that builds up of trust. But that can be impacted very quickly if someone suddenly is experiencing these feelings of emotion and then feel like they’re getting pushed into dealing with something quickly when they’re not entirely sure. That can break down the trust.
Peter: They may not be in a hurry anyway. They may be trying to delay the whole process for a couple of years.
Joanna: Absolutely. I’ve actually seen this play out really seriously a few times but at the end of the day when I touch base with clients many years later, I’ve never spoken to a client who’s been through this process and this emotion who then hasn’t been happy once they’ve you know got themselves realigned and reworked out what the vision of their life looks like after the business is taken away. It just takes time.
Maybe if we can talk about are there any other resources that you know of that businesses, I mean possibly they could talk to you Peter, but maybe this is one thing.
Peter: Well at the workplace, you know mental health institute we’re happy to help people. So yeah, if they want to definitely contact us, they can contact me. Send an e-mail and I’d be happy to talk to them.
Joanna: Yeah. I guess a message out there then is if you’re an advisor that’s working with businesses and you’re hitting a roadblock then think from your client’s perspective about maybe what the roadblock might relate to. Is there an emotion sitting under there that you should be aware of? Get them out of the space and have a chat with them. If you identify something else that’s going on that really might pose a serious issue to the transaction, then maybe get someone else like Peter involved and we’ll put some links for you Peter in our show notes.
For business owners who might be listening to this podcast, is there anything that you can share with them in terms of tips for two things. Firstly, leading into a transaction, what they should be thinking about in order to be prepared for the emotions that might arise. Secondly, after the transaction completes, how do they adjust to their new life I guess.
Talk to someone who helps bring clarity and direction
Peter: Yes. I do have some advice that can be taken or not. But before I go into that I just want to say to the advisors that are listening. I understand some people can be really hard to love. I understand that.
But whenever you go into this kind of relationship with someone, it truly is a relationship, watch yourself. Your own healthy is also important. Sometimes people get stuck but it’s not just the client. You may be stuck yourself, so take care of yourself as well. If you are finding that your negativity keeps growing over days and over weeks, I would suggest the same thing I suggest to the same suggestion that I’m going to give people contemplating a sale. Have you got a good coach? And I’m not just talking a business coach. Do you have a coach? Maybe a life coach where you can go and do a session or two that will provide you some clarity as to where you’re going and making sure that where you want to go is the same thing that you’re spending most of your time in.
Because as an advisor you’re going to get a lot better results if you’re in a good place. It could be a psychologist. It could be a very very very good, very well prepared life coaches there. It could be a mentor or social worker. It doesn’t matter. Somebody that you can respect. Someone that can hold up a mirror and I’m saying this to both advisors and people contemplating the sale of a business.
I know sounds like oh my god a life coach or I don’t need therapy. I’m not crazy. I’m not talking about fixing anything. I’m talking about as human beings sometimes we can not see what we need to work on. We don’t have clarity because who here that is listening right now knows what’s going to happen in the next 24 hours. I’m sure that all of us have always been surprised that we start a day thinking one way and we end up with this major thing that has happened throughout the day that we never expected and our life has changed so much and it’s not negative. I’m not talking necessarily negative things. Some people fall in love and they didn’t expect that. That’s not so negative.
Life is unpredictable. But we can bring some clarity as to where we want to go with our spirit and I use the word knowingly, intentionally because at the end of the day if you want to keep a good psychology, it is part of who you are so you can’t ignore it. You have to respect it. You have to honor it. So my biggest recommendation is that one.
Go and get a coach, a life coach that helps you look into those side mirrors. Sometimes we’ve got blind spots in our lives or talk to your wife or your husband they tent to tell you too.
Joanna: Talk to someone.
Joanna: Just be aware. Be aware that it’s a change. All change requires some sort of mental process in dealing with it. My personal view is that it can make the process a lot easier if you have a clear view of why you’re going through the process in the first place and you have some sort of vision in mind of what it is that it looks like for you after the end of the process. I don’t know if that’s right or wrong Peter.
Peter: It’s fantastic. I’m just going to put a little clarity, just a cherry on top of that because it’s so beautiful thing what you just said is that make sure that your aim as an advisor is greater than just the commission or the money that you’re going to get, and the same thing, the same advice for the person selling the business if you’re listening. Make sure that your aim is bigger than the holidays and the piña colada. That there’s some true meaning waiting for you on the other side of the sale, and then you’ll be right. You’ll be okay. It won’t be easy, because life is not supposed to be easy. It’s a myth. But it will be better and you will have more satisfaction.
Joanna: That’s a really good point Peter. We’ve really ventured into some interesting territory here. I think it digs at sort of the values that we all have behind what we’re doing but we’re in a very fortunate position being able to work in this area of M&A I think because there’s so many positive emotions wrapped around.
Everyone generally is all looking at the same outcome. We are looking at sellers who are generally excited in some degree about a sale, the buyer is excited about buying, the advisers you know are excited about helping the transactions but I guess as you say think about the people side of the transaction rather than the transaction itself, and the deeper meaning I guess for the buyers and sellers as well.
Joanna: Wonderful. Thank you so much for your time Peter. I really appreciate you coming on to the podcast to chat to us.
Peter: It’s a real pleasure. Real pleasure. Thank you Joanna.
Joanna: Fabulous. And look now what we’ll do is we’ll put a link through to you in our show notes on our podcast episode web page which you’ll be able to find at the deal room dot com. But Peter maybe just tell us for people who are listening in on their phones and don’t have time to shoot through the show notes, where can we find you?
Peter: www.wmhi.com.au – Workplace Mental Health Institute.
Peter: Very easy.
Joanna: Excellent! It sounds easy. We can all remember that. Wonderful Peter! Well thanks for your time. I hope you have a fabulous day. I think you really delivered some useful insight today to our listeners.
Peter: Thank you Joanna. My pleasure.
Our take-away tips for business owners and advisors
Joanna: And that’s a wrap for this episode of the deal room podcast with our guest Peter Diaz of the Workplace Mental Health Institute. To get connected to Peter, all you have to do is check out some of those links in our show notes and just as a little bit of a recap, I thought I’d run through what we talked about today and some tips to take away.
Today Peter and I drilled into the emotional aspect of the business sale transaction, particularly we looked at the seller’s perspective although of course there are emotions as well at play and everything that we’ve talked about from the seller’s perspective is also just as relevant from the buyers perspective.
But to sum things up, here are three tips for business owners out there who are considering selling their business in the future, and we also have three tips for advisors in helping their clients through this emotional journey.
Our first tip here for business owners is to prepare yourself emotionally. I know it sounds a bit touchy feely, but the important thing is to recognise that the process can be exhausting at times and it can evoke emotions that are unlike most business transactions you engage in. Just be aware that the emotions might come up. You’ve already helped to arm yourself by listening to resources like this podcast, so good work!
Secondly, be very clear about your end goal. This is what we like to call your WHY-power. Before going to market, you must deeply understand your reason for selling and work out that kind of life you envisage yourself to have after the sale. Identify your motivations and these motivations will help carry you through the emotional ups and downs of the deal.
And lastly, our third tip is to get the right advisors on board. Make sure you find people to surround yourself with that you can trust and who share the same values as you do. Surrounding yourself with the right kind of people throughout this transaction can make all the difference.
Now flipping over to our M&A advisors, we absolutely believe that you hold an indispensable role in caring for the emotional well-being of the business owners throughout the sale process. Here’s sales free tips for you in dealing with the emotions that pop up during a transaction.
Number one don’t be surprised. Emotions are inevitable when you’re dealing with human beings. By having realistic expectations of the process, half the battle has already been won. This also means that you have a duty to prepare your client for the emotional hurdles that are waiting up ahead.
Number two very importantly show empathy. As Peter highlighted earlier a business sale is not just a transaction. By this we mean that we must acknowledge the emotional undercurrents behind every decision made every step into the process. You need to be sensitive to the emotional needs of your client and understand that if they dig in or they appear to overreact to certain events, it might actually be that something deeper is going on. That can be resolved by an empathic approach.
Number three get educated and learn from other people’s best practices. Never stop learning. If you want to see better results, you must constantly work on improving yourself and one of the ways to do that is from learning from other people’s mistakes and successes. Actually, that’s exactly why I launched this book podcast to help all those businesses out there at the coalface and the M&A space to get great insights from other advisors and professionals and also to hear the stories of the business owners who are involved in sales and acquisitions.
Well look I hope you enjoyed what you heard today. If you did, please subscribe to the dealer room podcast on iTunes or on your favorite podcast player to get notifications straight to your phone whenever a new episode is out.
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Well that’s it. Thanks again for listening in. This has been Joanna Oakey and the Deal Room podcast, a podcast proudly brought to you by our commercial legal practice – Aspect Legal. See you next time!
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