Hidden Costs of Selling a Business That Founders Often Overlook
Founders often budget for legal and tax expenses when selling a business but neglect the emotional toll, which can lead to selling for less than the company is worth.
When preparing to sell their businesses, founders typically budget for taxes, legal fees, and potential price discrepancies. However, they often overlook the emotional toll of relinquishing their life's work, which can lead to selling the company for less than its true value.
Christine Slocumb, an experienced entrepreneur and advisor, refers to this as the "goodbye tax." This is not a line item accountants will find; instead, it manifests in decision-making when exhaustion and grief can weaken a negotiator's position. Slocumb herself sold her marketing agency after 22 years and found the sales process emotionally draining.
Early in the sales process, founders often feel euphoria about potential buyers' interest. This feeling, however, fades as the company's value is reduced to spreadsheet numbers and expert valuations.
In later stages of the sale, such as during due diligence, founders may experience vulnerability and self-doubt. Prospective buyers scrutinize the company's contracts and financials, which can raise questions about past decisions and trigger a mix of pride, defensiveness, and imposter syndrome.