16 Dec Exit Planning and the Three Types of Sellers
In our recent Business Brokerage Press webinar, we interviewed three experts from Chinook Business Advisory: Morgan Tate, Keith MacKenzie, and Hannah Nixon. Together, they explored the complexities of guiding business owners through the exit process. This webinar was presented in partnership with Business Broker Headquarters.
At Chinook Business Advisory, they’ve identified three common types of sellers. These are: The Teeter-Totter, The Panicker, and The Defeated Seller. Let’s take a closer look at each of these archetypes.
The Teeter-Totter
Of the three types, The Teeter-Totter is the most common. This seller is contemplating the idea of selling but is uncertain about whether it’s the right time. While they may still have passion and enthusiasm for their business, they are also aware that the day of sale could be approaching.
A Teeter-Totter seller often grapples with a mix of emotions. They may wonder if they can secure the best possible price for their business, or if they’re simply not ready to let go. This indecision can make it challenging for both the seller and any advisors working with them, as the decision to sell may fluctuate over time.
The Panicker vs. The Defeated Seller
Next, we have The Panicker and The Defeated Seller—two sellers who, though similar, differ in their emotional approach and the reasons behind their desire to exit quickly.
- The Panicker is in a rush to sell and often feels the pressure to exit immediately. However, this seller is usually unprepared for the process, lacking the necessary groundwork to maximize the value of their business. Their urgency is typically driven by anxiety or fear, rather than a clear strategy.
- The Defeated Seller, like the Panicker, is also unprepared and eager to sell, but their motivation stems from a personal or professional crisis. Whether facing financial struggles, burnout, or a significant life event, the Defeated Seller wants to exit quickly, but without the proper planning in place, they risk leaving money on the table.
The team at Chinook Business Advisory emphasizes that, ideally, it takes two to four years to properly prepare a business for sale in order to achieve the maximum value. However, The Teeter-Totters, The Panickers, and The Defeated Sellers often complicate this timeline. Their emotional state and urgent needs can present significant challenges for those helping them navigate the exit process.
Understanding Your Clients’ Motivations
Psychology plays a crucial role in dealing with these three types of sellers. Understanding their current situation and underlying motivations can help you craft the most effective approach.
For instance, does the seller genuinely want to exit, or are they simply going through a difficult phase? If you’re working with a Defeated Seller, it’s essential to help them realize that selling without proper preparation could result in a lower sale price. By meeting them where they are emotionally and offering guidance, you can help them make more informed decisions.
For The Panicker, reassurance is key. Acknowledge their urgency, but also help them understand that taking the time to properly prepare the business will yield better outcomes in the long run.
For all three seller types, one of the most important questions to ask is, “What will you do after the sale?” This question serves as a way to help sellers shift their mindset from the emotional weight of selling their business to the next phase of their life. It’s an essential step in guiding them to make a more thoughtful decision about their exit.
In our next article, we will explore how professionals such as business brokers, M&A advisors, and exit planners can best assist each of these seller types. With the right approach, there are numerous ways to help sellers navigate this complex transition and achieve their goals.
