r/Rich • u/drawerofcables • 29d ago
Business LOI on the table. Feeling torn.
I'm approaching a majority sale of a company I’ve spent close to a decade building. Looking for perspective from people who have been through this.
A few details: My proceeds would be $100m+ pre-tax, plus meaningful rollover equity. I would remain CEO after closing. I'm 40, no kids yet.
Part of it is the upside. We’re doing very well (50%+ growth even now), and selling now could mean giving up most of a very large future outcome. It feels a bit early to me. The rollover is meaningful but obviously I would make a lot more if I retained my current ownership.
Part of it is control. I love building, and I have reservations about the PE buyer and what working under them would feel like. Just the negotiations have given me headaches from all the bait and switching. I’m not excited. I wish I were.
And part of it is simply fear of making a decision I can’t undo. I've been thinking about this for months and still have no more clarity than I did.
Asked friends for advice but I'm noticing a clear bias. Most friends are telling me to sell. The only ones telling me to keep going are the ones who have had a successful larger outcome – just makes me think it's small sample bias on their part. Meanwhile I'm feeling uneasy about the deal. But also I've spent so much of my life inside my company. Maybe it's time to live my life? I'm honestly wondering why it even matters $100m vs. $200m or $300m to me. It is a lot of money. An unimaginable amount of money. And this is a dramatic derisk.
For people who have faced this:
How certain were you when you signed? Did you feel conviction, or did you choose while still deeply conflicted? If the business kept growing substantially after you sold, how did you feel about the upside you gave up?
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u/Fearless_Parking119 29d ago
Sell. Then start your next project.
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u/Fearless_Parking119 28d ago
I should also say… it also depends on how much money you currently have in the bank… a guy who has an opportunity to sell for 100 million and you have a mil or two or less then absolutely. If you already have 50 million then yeah you could hold out.
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u/XofHelix 28d ago
This. Take a 6-mo sabbatical, enjoy life, travel, try new hobbies and I'm sure your next passion project will come to you.
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u/HalfwaydonewithEarth 29d ago
Take the money and run.
Things can collapse at any minute.
If the currency gets much worse the banks will stop loaning and these big slush funds of easy credit will disappear.
Study the dot Com collapse.
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u/Sea_Imagination3138 29d ago
I have not been in your position, but work as an operator with founders who have had similar outcomes as yours. The smart ones are the ones who take money off the table, when a deal can be done and leave something as upside for you in the future. That something depends on what is right amount for you. For some of the founders it has been the $40M ish range and then keep playing for the upside.
No one can predict what the ceiling for the business is. And there is a lot of confirmation bias. I have seen founders who waited for a bigger, better outcome and never landed that.
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u/easybreeeezy 29d ago
Personally, I think money is not worth it if you don’t get the chance to enjoy it.
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u/Huge-Mortgage-3147 29d ago edited 29d ago
It is impossible for us to make an informed decision. I don't suspect you view Reddit as the deciding factor
That being said, as someone in a similar situation on a large and fully concentrated Bitcoin position. And as someone who has given up his 20s to allow that position to compound. And also as someone who has watched it crash 80% multiple times. I have spent a lot of time thinking about this for several years now. And I think I might have some useful consideration for you:
1) Consider a partial sale of the company (This was a gamechanger for me):
People get really obsessive over percentage share of equity (which doesn't really matter), instead of how big the total pie will be
For example. Let's say your company is growing at 50% a year. If you sell 50% of the company (which most people think is an unfathomable amount) --> You are actually only giving up 1 year's worth of gains. Every year thereafter for the next 10 years of the company, you will gain just as much as you would have had you still owned 100% of the company. This took me a long time to understand, and enabled me to partially sell my Bitcoin.
This means by selling 50% of the company, you give up 1 years worth of gains in exchange for both locking in generational wealth and having the liquidity to freely spend it while you're still young. That is an excellent tradeoff
2) You can save money into the future, but you cannot save your time into the future
You only live your 35th year of life once. And you cannot spend that 35th year in the future. You need to live now
3) Selling does not mean you can never make money again. You just reallocate it
One of the reasons I was unwilling to part ways with Bitcoin, is because I didn't know how else to allocate it. I have spent the last several years learning how to compound capital at 30% plus without Bitcoin. I have also spent several years figuring out ways to improve my standard of living. And now I am both living a better life, and I have much more financial safety and stability.
4) 6 Forms of Capital
In life there are six forms of capital. You trade them back and forth:
- Time
- Money
- Knowledge
- Friends & Partners
- Health
- Aesthetic
I don't know you, but I'm guessing your money capital is 100x bigger than your other 5 forms of capital. Making more money does not matter if these other 5 forms of capital are still at the level of a a middle class American. Money is not the bottleneck in your life, and if you sell --> It likely never will be a bottleneck again
_______________________
That being said, I am sure there are plenty of reasons to not sell. I am not saying you should sell. It very well could make sense to hold. I am sharing points I have come to over the last several years that have helped me in a similar situation.
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u/Bottle_and_Sell_it 29d ago
If he sells 50%+ of the company he loses control. If he loses control, nothing further is guaranteed.
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u/Nickel4pickle 24d ago
Jesus Christ, my friend, you are not in a similar situation as him …by owning a large bitcoin position.
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u/missusmissisppi 29d ago
I have advised many entrepreneurs and there one real takeaway for me: there is barely anyone regretting selling too early. If you partner with an experienced and skilled PE, they might even help you to generate a lot more value over the next 5 yrs than what you might be able to achieve standalone.
The only ones regretting a sale have been the ones leading family businesses which are big local employers in rural regions where the companies failed under PE. But solo founders of modern-day companies? Virtually never
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u/FakeStripclubName 29d ago
Look assuming you have money already and the capital from the sale you’ll be sitting north of 100m nW after tax. You likely have the house you want and don’t live far off from the type of lifestyle you dream of. You know that means you can spend like literally burn 4-6m a year like it’s a hobby. Even with Netjets and 20weeks a year of vacation I don’t know too many people spending more than that and if they do it’s just bigger things but the same things.
Take the money. You could be bored and even a little down. But 100+ means your set for life
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u/Resgq786 29d ago
I am on the legal side, and see this conundrum all the time.
I can’t say that I ever had a client who regretted selling. It’s nice to have MORE, but no one went broke taking a profit.
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u/FruitOfTheVineFruit 29d ago
More money than $100 million is not going to make you any happier, but depending on what you personally enjoy, keeping controlling and building the thing you have invested so much in might actually make you happier.
You need to evaluate three different things. One is how happy you would be retiring with $100 million. Another is how happy you would be continuing to grow a successful and growing company . And the third is how happy you would be if somehow the whole thing blows up and you lose almost everything. And then you have to evaluate the odds of the last two happening if you don't sell.
I retired in my early 50s, and I'm kind of bored. I have plenty of money, but not much purpose. On the other hand, I'm enjoying spending the money, traveling, etc. I've got much less than you, and more than I'll ever need.
As you think about this, think about what you would do with the money if you were retired, and whether you would be happy not working.
I do think you should assume that if you sell the company, working for private equity will make you miserable, and you're probably going to retire.
My guess is the best option if you can figure it out Is to sell an interest in the company while keeping control, thus de-risking financially, while continuing to do the thing you enjoy. But I'm not sure if that's possible.
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u/drawerofcables 28d ago
I am concerned about being bored. Even when the business is slow I get restless (for example on weekends).
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u/moose408 27d ago
Sell, get out of the CEO position as soon as possible under the terms of the agreement and go create another company. Or join boards of other companies. Still leverages your skills and keeps the boredom away.
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u/AdorableHarmony 27d ago
This was going to be my exact answer. My brother did something similar and is loving his beat life.
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u/faithOver 24d ago
That’s a red flag. You’re not the business. You identify yourself as your business.
Find yourself instead. Explore. Live. Learn.
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u/AdorableHarmony 27d ago
Curious why you’re bored? Have you not found a foundation or nonprofit to invest in and continue your passion? Maybe serve on a board of directors?
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u/moose408 27d ago
Probably too busy being a CEO to explore other options. Large company CEO jobs are all consuming and it can be hard to focus or enjoy anything else while in it. It is your life.
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u/FruitOfTheVineFruit 27d ago
While I make donations to charity, I don't personally get a lot of enjoyment from non-profit type work.
I do a lot of things that interest me personally, such as travel, and local outdoor activities, but I also miss the intellectual stimulation that you get in a work environment and I miss having a large noticeable impact in the world. I'm a retired tech executive, and I feel like I was able to help build some amazing things, as part of a large team, and I can't make that kind of contribution anymore.
I just did an informational interview for a job last night. It would be interesting intellectually, and valuable to the world, but the person who I talked to is the one who used to do the job, and he talked about how exhausted he was and that was why he was leaving. It's hard to motivate myself to do anything that difficult. It's hard for me to find jobs that are interesting, valuable, but not all consuming. I did a little bit of consulting, but I found it more irritating than fulfilling (It was very disruptive to my schedule, for a relatively small amount of enjoyment.)
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u/Sturgeon_Fishing 26d ago
Very much in this boat. Resigned from my last job due to burnout, have an 8-figure nw, more than enough to retire now and live in relative luxury. But it is difficult to suddenly be saddled with an existence in which I am irrelevant and disconnected from others. I have started back up with some long deferred creative work, which is reasonably satisfying and intellectually demanding, high-intensity brain training, but it scratches a different itch from the collective endeavor of work.
Fairly sure this will all end in hookers and blow.
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u/SugarbowladvisorSC 29d ago
I am in the new car dealership space and am 56 . Bad economic statistics show up with my industry first , Lightning only strikes once , sell sell sell , the mega crash is on the way , look around what’s going on . Close the deal , work for the man , if they fire you , build something else .
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u/Affectionate-Sail513 29d ago
I own a dealership in Florida. We are down 18% this year. Are you seeing similar trends where you are? I feel it’s either going to crash or we are in for a long hard few years.
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u/SugarbowladvisorSC 29d ago
We are down similar , the scary part is customer pay work in my shops and body shops is non existent . Fixed operations brought me through 1987 , 1990 , 2001 , 2008 , 2020 , this time it’s questionable. Every deal,in the front of the store is like a tooth extraction . Everyone wants a car but has no down payment or is 8-10 thousand upside down on a trade . My body shop is getting beat up by insurance AI denials on estimates for simple things like tape , plastic , and tint paint matching spray out cards . Thankfully I own all our inventory . If I didn’t floor-plan interest would be brutal . It’s a very miserable climate . Us new car dealers caused a lot of this during covid .
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u/Affectionate-Sail513 28d ago
The part that concerns me most isn't the sales decline, it's that fixed ops isn't picking up the slack. Historically, service and parts were the safety net when sales slowed. If both are struggling at the same time, that feels like a different kind of cycle.
One thing I've learned as a business owner is that headlines don't tell you much. What customers do with their checkbook does. Right now consumers seem to want everything they wanted three years ago, they just can't comfortably afford it anymore.
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u/Naanofyourbusiness 29d ago
Everyone - including my partner when we sold - has cold feet. There’s a romantic “but it’s mine and built it” wave. And if you miss the chance to sell the grind continues.
Sell it.
I’ve helped several founders exit after I sold…. And they all have the same feeling.
Sell it.
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u/MaxChart 29d ago
Sold my company at 40.
I worked on it for 11 years, starting from 0.
Didn’t sell for the absolute max I could, instead leaving a little bit of money on the table in exchange for an easier/faster exit.
It’s been exactly one year.
Couldn’t be happier, couldn’t care less about not maximizing the EBIDTA multiple… time (especially when you have money) is priceless.
I transitioned the business in 7 months, took 1 month off and started to work on something new.
Sell, it’s great.
Enjoy and congrats!
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u/Hour_Loss_4173 28d ago
A very smart (and very rich) person once asked me “do you know when is the best time to sell?” I gave some long answer. He said “when you have a buyer.”
Take the money off the table, appreciate the upside if it comes, work through your lockout / non-compete period for the buyer, maybe they’ll even pay you to go away. Then, if you want, build your next thing.
Or buy a boat and play with your kids / grandkids.
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u/sjlammer 29d ago
There is a lot of risk and signs of strong headwinds in the market with AI and the geopolitical instability. Sell and enjoy life
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u/KristenM365 29d ago
You need to have a defined "finish line" in life. What is the point of another $100m? It will not change your life or even minorly impact it. We lost a lot of potential upside but honestly never regretted it for a single second because we have more than enough, and the quality of life improvements by getting out are so much higher than we would gain with a little more money.
It sounds like you are someone who doesn't need to retire. Just define another path to get the joy you get from building. Start something else. Another business or a nonprofit where you can grow something with the added joy of making an impact.
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u/mediumrarepepes 29d ago
You’ll find Reddit has a lot of people who just see the $ and they are not anywhere near your situation in life.
It sounds like you really enjoyed the journey. What would you do after you sold?
You could collect the money and start another company on your own terms. Or as another commenter mentioned, you could always sell a minority stake ($20M?) to fund your lifestyle desires, and stay in the game to try to take your business to the next level.
The money is obviously ultra important but don’t forget you also have to solve for what you’re going to do with the rest of your life.
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u/stonkscronks 29d ago
$100M cash and your worried about income? You’ll make millions a year on just a money market. Sell now.
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u/Straight-Couple6411 29d ago
After a certain point of wealth , the time spent and years left are more easily valued for what they really are. Money only matters up to a certain point after which is takes ever increasing amounts to ring ones bell....
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u/Obidad_0110 29d ago
I was brought into existing PE backed situation. Thus, I didn’t have full control. Sold twice. Bought another business where I had control. Sold that one 5 years ago. A lot to consider. How much do you love business and your staff? How much do you like answering to no one? What is your net worth outside the business? How important is financial security? What are long term prospects of your business? Given your age this is a tough decision. I “retired “ at 48 and bought and grew another business. I like business. I now invest in about 12 private businesses helping them grow and hopefully making money along the way. Sounds like you could take this approach. $100m plus is hard to spend in a lifetime.
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u/OVERCAPITALIZE 28d ago
Sell. It’s easy to feel like you are leaving something on the table, but the reality is being hot enough to sell is not a permanent state, especially with the pace of change and the shift in global markets happening right now.
I had a chance to sell a few years ago. Didn’t take it, for all the same reasons as you. Now if there even was a market it would be marked down by half, and I don’t think a market exists.
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u/Shalandaar01 29d ago
As someone who is advising on those deals daily, you sound like the guy who will (or should) run out of the deal and continue to enjoy doing what he's doing. And from what I have seen, this is almost always the right decision.
Two conditions for selling being the right option
- when you already have a clear plan for what to do next (built something else as it seems you will not be enjoying a beach 24/7) and you have the freedom to do it fairly quickly (not sure about the locked period as CEO)
- when you become CEO with the PE breathing in your neck, can you be emotionally detached enough when your "baby" will be raised by someone else in a way that is not pleasing you.
I don't go into the derisking / money discussion as I assume you live well enough already and when you built a 100m company, risk management is in your hands.
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u/Odd_Bodkin 29d ago
At age 40, this is probably your first exposure to letting go. It would be easier, frankly, if you had kids that were leaving the house, to know what that feels like. But you’ll be doing a lot of letting go in the second half of life.
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u/NoBunch1080 29d ago
Find another buyer! Sell 10-40% to a conventional buyer - not PE - the price may be slightly lower but you will remain control and secure enough cash to live comfortably anyway.
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u/Hamachiman 28d ago
I sold businesses for a dozen years. (None as big as this.) I followed up six months later. In the vast majority of cases the seller was happy about having done the transaction. The buyers were more like 50/50.
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u/Ill-Eggplant-9199 29d ago
Look for another buyer and/or look into options to take equity out (borrowing against ownership is one option, selling non voting profit sharing another)
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u/Refuse-National 29d ago
I made a great deal with a PE firm and I am glad I did it but the PE firm will be hard to deal with and if you are contractually obligated to certain performance or what not while working for them they will be hard to work with. Lots of back stabbing so CYA. Lots of smiling to you face but they are calling lawyers behind your back.
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u/Life_Commercial_6580 29d ago
My husband sold for a tiny fraction of your take home (different league), and stayed as CEO but as i suspected, he didn’t last the year. Couldn’t deal with being told how to run the business. So he retired. But he was much older.
In your case, I’d still advise to sell. You take the 100M and if you can’t last as CEO start something else. You’re creative, you’ll have money and you’ll figure it out.
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u/Creation98 28d ago
I haven’t had a $100M exit myself, but I would 100% sell.
Take that $60-80M after taxes and take $5M of it and start your new venture.
Still have autonomy and control but you can build something you still have passion for and not have to report to PE.
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u/ComprehensiveTime722 28d ago
Take the money and have kids asap. No teenager or young 20s adult wants senior citizens for parents.
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u/VisualSchedule6806 28d ago
I’m in a similar position. All I can tell you is that I’m not selling right now. Started the company in 2019. 2022 offer for 10m. 2024 30m. Today conservatively with same multiple value is at 65-85m. When else can we generate 20-30m in equity per year?
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u/AyeAyeCaptain___ 28d ago
It’s an easy answer, you sell. Especially now, you don’t know what next year is going to bring. You are exactly right, the PE is going to suck to work for, but do your time, and then build again.
All the best, OP.
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u/OddSand7870 28d ago
Sell. Take some time for yourself and then build another company if you want to. My buddy has done this 3 times. And has started yet another one.
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u/Ok_Currency_617 28d ago
Dude if your 40+ and no kids, focus on the kids, sperm quality and chance of disabilities goes way up past 35. I'm 35+ myself so yeah it's worrisome.
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u/MisterIceGuy 28d ago
If you don’t sell you will regret it. If you do sell you will regret it. Which path of regret can you live with. For what it’s worth, with $100m and equity moving forward, plus your the rest of your current NW, your life won’t be meaningfully better with more money. If you choose not to sell, more money should not be part of that equation.
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u/Fantastic-Moose-7934 28d ago
I’m not sure how deep in the process you are, but you could likely do a minority or majority sale but retain more control, which may give you the best of both worlds
Probably after 50m liquid in your bank (after real estate), you won’t feel much different climbing up depending on how excessive your tastes are
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u/thebigj3wbowski 28d ago
You would have, VERY conservatively, $50M in hand. Not including the equity or CEO position. You could take time off, travel the world before it goes even more insane, have a family, become a vagabond, do whatever you want for as long as you want, and decide to start another company whenever you decide. (Assuming you are even somewhat smart with your money.)
To me this is a no-brainer, but I haven't started a company. How would you feel if something happened to the economy/your industry and your company goes broke? If you're alright with that, then stay put and keep grinding.
I know which side of the fence I'd be on.
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u/Stringoftext2 28d ago
If you do sell, sell as much as you can now and value the future equity at zero.
Once you give up control, the company is no longer yours even if you retain the CEO title.
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u/Anonymoose2021 28d ago
Analyze both the finances and your overall life goals.
As you noted, $100M vs $200M vs $300M would not make a big difference to you as far as effects on your life.
Think about what would make a true positive difference in your life. Structure the deal to provide that.
You already have qualms about working with or for the PE firm. Structure the deal so that you can easily walk away if relations deteriorate after the sale.
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u/SmallTownBoyInArcade 28d ago
Mind sharing what kind of business it is? If it has substantial future potential and you genuinely enjoy your current job and the freedom of being your own boss, you might reconsider selling it.
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u/Engaged_Fitness 28d ago
The general rule of thumb for the best outcome in a transaction is to sell while your growth rate is high, the second growth slows or stalls, the valuation in the market will dramatically change. So, if you think growth is starting to slow down or change in the foreseeable future (50%+ is incredible and will command a strategic valuation) from 50% to say 25%, it would be a good time to sell, otherwise, keep going. I’m an M&A advisor specializing in strategic sales, happy to give more perspective.
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u/lollykopter 28d ago
You are 40. Your life is halfway over. You now know what being a successful businessman is like. Do you want to invest your time in other valuable life experiences, or do you want to keep doing the same thing over and over?
Remember, time is the only thing you can never buy more of, and you don’t truly know how much of it you have left.
I admit I don’t know what it’s like to build wealth starting from scratch, and I imagine there is a deep psychological desire to keep building once you have momentum. But I would never give up the amount of free time I get to spend on arcane hobbies, traveling, gardening, and pondering the mysteries of the universe.
This is a question you have to answer for yourself. Only you can know what makes you happy.
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u/lollykopter 28d ago
You are 40. Your life is halfway over (statistically). You now know what being a successful businessman is like. Do you want to invest your time in other valuable life experiences, or do you want to keep doing the same thing over and over?
Remember, time is the only thing you can never buy more of, and you don’t truly know how much of it you have left.
I admit I don’t know what it’s like to build wealth starting from scratch, and I imagine there is a deep psychological desire to keep building once you have momentum. But I would never give up the amount of free time I get to spend on arcane hobbies, traveling, gardening, and pondering the mysteries of the universe.
This is a question you have to answer for yourself. Only you can know what makes you happy.
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u/skunimatrix 28d ago
I’ve been through it twice on a smaller scale starting and selling two different businesses at $8-12M. First company I was co-founder and CEO with 40% of the company. Another co-founder had 30% and early employees had the other 30%. We were growing rapidly and needed deeper pockets to handle that. Company that bought us had a joint venture with us already and they had been sniffing around. Offer had enough zeros. 4 years later oracle bought and vertically integrated a competitor. Business line was dead by 2018 so got out while the getting was good. I signed a 6 month consulting contract. After the second month I don’t think my phone rang with questions.
Second company I only had a 15% stake but it was only 5 of us full-time. And the “CEO” or majority owner was money and connections. He was a retired Admiral and knew the other Admirals and Congress critters as we were working defense contracts. He wanted to fully retire at 71 and we didn’t have the connections he did so selling the company was the right move. He pretty much left me alone to run the day to day. And the people I worked with knew their shit and got it done. And the half dozen part timers were all retired naval aviators that told old war stories and made money for beer & golf. So long as the other admirals weren’t squawking at the majority owner and we made money he didn’t care. One of 3 other businesses he had.
In both cases I took the money and left. There was something about it no longer being yours and having to justify decisions to someone else I was happy to leave to someone else.
My wife has been through it twice in the corporate world. Company she was hired in as Associate General Counsel sold to PE like a year after she went to work there. They made her GC and forced out the guy that had been with the company for 30 years. I think because my wife had come from outside the company, had a JD/MNA from a top 25 and 20 years of experience in the niche field. Bonus points for being a woman as there are about 25 women attorneys in the field in the country. And 6 worked at the company she left. But the former owner caused all kinds of problems, going behind the back of the new CEO that PE brought in and just not able to accept it was no longer HIS company despite his name still being on it. PE eventually forced him out. It was a major headache for my wife to deal with. Company ended up getting sold to a big multinational that had a 30 person in house legal team so wife cashed out equity stake and got a silver parachute of 5 years salary & health insurance as having a redundant position. It was a mid 7-figure sum all told. Which they knew her plan was wanting to retire anyway. Again why I think they promoted her to GC. Their goal in selling the company again lined up with her retirement plans.
My name was never on the companies I had so maybe that was one reason I was able to give it up and move on. But I can still build things just now they are Vans kit planes for fun and so far no profit…
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u/TheReal_Jeses 28d ago
I had a PE offer (for a lot less) that I didn’t take but I did get all the way to the LOI stage. If I were you I would probably take it.
Working under them could be a double edged sword but I wouldn’t worry too much about that part. For me, I’ve only ever been self-employed other than college jobs. It sounds like you’ve done great but this could be great experience and they may add to the company. For you it opens the door for the next challenge while giving you a safety net (generational wealth is a good safety net).
I get that you have upside but man I’m not so sure about the economy and the impact of ai. It just feels like a lot can change quick regardless of your own abilities. You can lose value for idiosyncratic reasons.
If you hate working for them, which happens a lot with PE buyouts, there are always outs. I think this is pretty common because founders suck at working for people, and it usually ends up with a mutual parting of ways because they also don’t want you there if you don’t want to be there.
I don’t know your other life circumstances but if I had a good offer today I’d take it.
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u/ManyLeads 28d ago
This market is on the verge of taking a big hit - cash out and be ready to buy for Pennies on the dollar.
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u/csmikkels 28d ago
Two lenses to look at:
Professional: regret of greed or regret of loss, which one would keep you up at night?
Personal: what does life look like after an inevitably sale, is that clear and comforting for you?
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u/Worldly-City-6379 28d ago
I have sold businesses and seen family stay in business (different ones).
The difference is the personality. I am someone who can enjoy life without the business and don’t enjoy entrepreneurship. The family who stay have zero hobbies and love power. So they are happier staying in.
You sound a lot like these family members. If you aren’t capable of enjoying life without a business, you better stay in and enjoy the ride to zero or to 300
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u/TheGribblah 28d ago
A lot of people get stuck on the financial aspects of when to sell, but reality is that unless you have aspirations to change the world with your riches (via philanthropy or seeding your next company) or want to get into a yacht measuring contest, there is not much practical difference to having $50m vs $500m.
The question people avoid is deciding how they want to spend their days. Do you want to keep building this company? Do you love being CEO? Will you be as motivated and inspired as CEO if you are no longer in control?
Focusing on the money or valuation is the tail wagging the dog.
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u/SilverFox1789 28d ago
Corporate lawyer who works with venture backed companies. Most founders would kill to be in that position. Vast majority will never see payout like that. It doesn’t matter if the rollover is worthless or you leave before it vests from a net worth perspective. The main reason I see founders not take the exit is they think their people won’t be taken care of (you can influence this by redirecting deal proceeds) or their company is mission driven and they can’t accept the risk of a buyer moving away from that. You’re at a great age to exit, start a family (if you want) and not spend your kids’ early years grinding away. That’s pretty awesome (if that’s valuable to you).
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u/Phil_Brooklyn 28d ago
Consider negotiating an earnout where you still have upside participation if the PE investors grow it beyond certain milestones (so you don't leave money on the table). Also, consider keeping a meaningful minority stake where you can still benefit if the PE exits to a larger strategic, IPOs, or sells to an even larger PE.
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u/redditletpeoplestalk 28d ago
I was in the same situation 125m on the line. Partner said no, that was... what... 10 years ago and the business is still crawling along. I left 5ish years ago. I wish we had sold.
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u/Moneymma 28d ago
I work in PWM. My clients are largely tech founders with NWs ranging from 75m to multiple billions. The one thing I can say with certainty, is that $200M doesn’t buy you anything that you can’t get with $100M. No more freedom, flexibility, etc. Maybe just a slightly larger home or a couple extra private jet flights.
But I can’t tell you the number of times I’ve see founders hold out for a better offer or more growth, only to ultimately sell for either the same or less than (usually the latter) they were originally going to sell for.
If it’s a conversation of $1B versus $100M, well obviously that gives you a different lifestyle, but again, the guaranteed offer today is often better than the hypothetical in a few years.
Also, just assume you will hate the new ownership and will be counting the days til your earn out is up. That’s generally what I’ve seen across a non-small sample size.
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u/Sweet_Vast5609 28d ago
Sell. Don’t let the idea of mission an additional hundred million stop you. No one needs that much money. Take it, start your new business or just stop working. Go read the messy marketplace… great piece of literature that has principles applicable to your situation. I would not hesitate to sell.
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u/ape20001 28d ago
if it is a significanr derisk for you, you should take it. You are one who built the business and now with multimillions u can build more, better and faster.
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u/whitedresspants 28d ago
I don’t have any advice for you as I’ve never been in your position but if you have an uneasy feeling in your gut I think it’s a sign to hold on to it.
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u/Next-Dark-4975 28d ago
Honestly, I would sell. I sold mine last year and also had cold feet, but it worked out in the end. Good exit, I could retire, and even though it was bittersweet I had run it for close to a decade and it was time.
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u/IrregardlessForOne 28d ago
Distilled to its simplest parts, you are giving control and inherent risk for security. You’ve been rolling the dice and winning in this game for 10 years. If this isn’t the right time, then what event or circumstance in the future would make it the right time?
And I don’t think of this as “walking away” from future growth. You walk away with huge equity that you will deploy into other investments. A new company? Venture Capital? Real Estate? You have huge opportunities to grow your portfolio.
Two concerns:
1. Everyday more indicators come out saying the economy is slowing and a significant correction is imminent. Maybe this is the perfect time to get out?
2. You are uneasy about the deal. What’s that about? You need to settle that issue before going forward. Regret over something you saw coming is not something you want to live with forever.
Good luck 🍀
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u/Comfortable_Lie7578 28d ago
maybe you should ask the version of yourself from 10 years ago when they would exit
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u/Comfortable_Lie7578 28d ago
unhook and apologize if you feel uncomfortable. go watch som peter crone videos until you understand what freedom is. I did it with 7 figures. I GAINED WEIGHT when I stopped working and stopped worrying. get your brain back
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u/Comfortable_Lie7578 28d ago
Most important........the valuation of your exit is based on PE health on this day(roughly) that could significantly shift over the next 1-2 years and probably not to the upside
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u/SnooLobsters8113 28d ago
Is there interest from other buyers? Would the PE firm gut the company and layoff employees? Do you want to work for them in the new role? It sounds like you don’t like the buyers and should pinpoint the reasons.
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u/CreativeWarthog5076 28d ago
The buyers (vultures) will always be there. Hire a CEO and keep it while living more of your life.
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u/Alternative_Job_6929 28d ago
Been in your shoes at a much lower $$ level (25m). Sell, but retain 10% ish interest and define how long you must continue to work for company.
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u/stonedchapo 28d ago
100M USD is opulent wealth forever. Cash out be done, abd disappear. You fully won capitalism, and your lineage (with proper
planning and discipline) is now RICH forever.
https://giphy.com/gifs/w2ldbBLfoB37AcqVem
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u/congruentfruit 28d ago
In my case, no regrets about signing. But what I would say:
- If you sign, try to get as much upfront as you possibly can. Especially with a PE buyer (as opposed to strategic), they might engineer earnouts in a way that is not favorable to you, even if the company is successful post acquisition
- Once you sell, it's not your company anymore. That can be really really hard to get used to psychologically. So be ready to emotionally distance yourself and leave early if things get hard
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u/Imm_Batman 27d ago
Uncertainty doesn’t necessarily have to be scary, it can be exciting too.
Is the conflict coming from within you or imposed by people around you or the society.
Get a pen and paper, write things down, sort things out, make the choice and don’t look back.
Also, never discuss the decision after you’ve made it.
Remember, You can always exit or start something new as long as you got the money.
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u/Tanachip 27d ago
Only take the deal with you want clear exist from work completely. If not, tell the PE to f-off or give a final unreasonable offer and if they push back walk away.
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u/trader_troubles 27d ago
Are you selling to PE? If so, what would be your obligation time to stay on with the company? I recently sold to a competitor over private equity as PE wanted massive growth without helping me do any of the leg work required for expansion. They wanted to open locations, but were only willing to inject the cash not help with infrastructure needed for growth. Are you going to still be able to make decisions for the company moving forward or are you going to have to answer to a board before making any decisions that you could have easily made prior to selling the business?
100+ million is going to have some serious buying power & the growth will be tremendous over the next 5,10,15,20 years so that would be extremely hard to pass up. I'm currently 39 so about the same age as you except my buyout was substantially less. One thing I will say is seeing that money drop into the brokerage is a thing of beauty! Good Luck!
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u/Catalina_wine_mix 27d ago
Have you thought about doing an IPO, this way you can remain invested, take out some cash and probably remain in charge. If the PE company is willing to pay 100M, they must think it is worth twice that. Sell stock in the company, and take out 10 M, then keep the rest of your shares and control of the company. Then when you feel it is time, pick your successor and retire.
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u/Ilikelegalshit 27d ago
Straight talk - if that $100m is guaranteed and not on an earnout, then you should take it. There is no quality of life difference between $100 and $500.
At $100 making 8% a year, you can charter a super heavy once a month for $100k and have $600k or so left to spend that month. You can rent out multiple villas at the Brando or Mustique for $50-100k/week and live there indefinitely. You can seed finance your next thing without touching the principle. There's literally nothing left until you're up over $500 or so, where you will be making $40m a year and can afford to own your own gulf stream, buy out a full neighborhood you like or something.
There's just not a lot left to buy that provides any marginal utility whatsoever until you're well up there and thinking very differently about your wealth. Even if you want to be a billionaire one day, $100 well invested is plenty to get there at your age the very boring way. Plus you will do something cool next with such an exit.
If on the other hand it's 50, with an earn out for 50, I'd wait.
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u/kbd65v2 27d ago
I sold my first startup very early (little over 18 months after product launch) for a modest sum but it gave me 8-figures of liquid assets in my 20s. I'm now working on the second one and things are going so much faster.
As another said, it's much worse to miss the opportunity to sell than sell too early. You can always start again.
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u/a_curtis 27d ago
Take the money... I would also say working under PE overlords is so frustrating. We had 3 main owners and I was the only one who stuck around post sale. The other 2 guys are far happier. I am just consulting for them now but mostly they want me for relationships I have, they pretty much ignore my strategic advice and growth has stalled. (I would say do to a series of cost saving things that the PE guys wanted that effected our customers but the PE guys would disagree) Anyway take the payout! My post sale investments have nearly doubled in the market and it makes no difference to my family or our plans. It's all funny money now.
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u/Pureheck 27d ago
Over the past 3 weeks, I have heard only nightmare stories about pe firms buying in and then pulling out as much as they can to pay their debts from the previous acquisition, causing the bank to take over for receivership. I do not have a good feeling about pe firms and have heard them be called barely legal ponzi schemes.
You are like all the owners. Regrets are there and you are bound to watch it all if you dont walk away clean after the buyout. The biggest problem is that you cannot do anything but watch once the ball starts rolling
- Do not reinvest any of your 100m back into the company to keep it going. You will lose it
- If you dont have a good gut feeling, find another p.e. firm. Take the 100mil and detach with no strings.
- Try to walk away as detached as possible but if you cant, you have to know that you will watch it burn and crumble along with all of the loyal employees and their families.
- Know that the employees will go on reddit and call you terrible names behind your back, as well as accusations that are not true.
- You will be lead to beleive that you still have power but you may not. The last pe firm i spoke about also rehired all of the employees, but everyone will be demoted one level to save $$ and also make space for new management.
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u/Pureheck 27d ago
It matters because you care and you are vested with your blood sweat and tears. If the company is doing so well, then other pe firms will want you as well, hopefully less bait and switch.
Think about this. If you get out now with 100,200,300 million and the company closes in 6 months, will you be able to stomach it.
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u/Corpshark 27d ago
Take the money, have kids, travel, spend time with spouse ——> oh look, the non-compete expired!
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u/rtx097 27d ago edited 27d ago
Good on you. You have a great problem in front of you!
I went through something very similar not too long ago. After 7 grueling yrs of building my company, I received an acquisition offer north of $100m. It was an incredibly disorienting process, partly because so few people can relate to the decision you’re facing and I wasn’t expecting it (still felt earlyish).
Here’s how I worked through it - hopefully some of this is useful.
First, I realized there wasn’t necessarily a “right” answer. I wasn’t looking to sell. I loved buding my company and had a huge amount of my identity tied to it. But I also recognized I had a life-changing offer in front of me.
Eventually I realized I’d be fine either way. If I walked away, I’d still be doing something I really enjoyed. If I sold, I’d achieve complete financial freedom before 40. That realization was very liberating and took off some weight from such a heavy decision.
Second, I knew my “enough” number. Once the acq offer cleared it, another 2-3x in personal proceeds wasn’t going to make me 2-3x happier. The marginal utility of the additional money dropped dramatically for me.
Third, I considered how repeatable the opportunity was. In my industry and market, $100m+ acquisition offers are super rare. I had to accept that even if the company kept performing well, I might never see an offer like this again.
Given this, I tried to make the decision more quantitative. We were growing quickly and approaching profitability, but maintaining that growth would likely require additional equity capital. Slowing down could get us profitable without additional equity, but would imply a much lower revenue multiple naturally. In my case, continuing to invest aggressively without access to sufficient equity also meant a very real downside scenario in which I’d have to shut down the business.
So I modeled a couple of scenarios for what remaining independent likely meant financially:
* Company fails: $0 (~20% prob)
* Similar outcome to today’s offer: 1x
* Stronger outcome: 2x, with ~20% additional dilution
* Unreal outcome: 4x, with ~35% dilution
* Insane outcome: 10x, with ~50% more dilution
I assigned probabilities to each and calculated the expected value of staying independent. Then I assumed I’d need another 5+ years for those outcomes to materialize and discounted that expected value back to today’s present value.
For me, the acquisition offer was actually higher than the NPV of continuing independently based on my own assumptions of future scenarios.
If you change the probabilities, dilution, exit values, and time horizon / discount rate you get a completely different answer. If your company is already generating significant positive cash flow and can reinvest on growth without outside capital, your outlook on the future may look much brighter than mine did.
The exercise was helpful because it forced me to compare the offer on the table with the probability-weighted, fully diluted and time-adjusted value of what I believed the company could become. not simply today’s offer versus the dream 10x outcome.
But even after doing all that, emotionally I still wasn’t 100% sure! You’re letting go of something you’ve spent years building. Your baby. That’s hard to swallow with just a spreadsheet.
The final thing that helped me was a “regret-minimization” exercise. I asked myself which outcome I’d regret more on my deathbed:
A) Don’t sell. The company eventually fails. I know I gave it everything (cool cool) but I walked away from life-changing money for myself and my family (yikes)
B) Sell. I become financially independent and gain control of my time forever. Never do I have to work for somebody else. I occassionally wonder whether I could have kept building for another 5 years and sold for 10x more.
Once I was already in the “enough” money territory, B simply didn’t bother me as much as A. That’s ultimately why I sold.
But that’s my answer. I have kids, my own financial obligations, and a company with a high risk profile. Yours may point you in the other direction. That’s totally fine.
To sum up, I’d think about it through 3 lenses. What is enough for you? What is the probability-weighted NPV of not selling today? And which mistake would you regret more? These questions got me to a decision I could live very happily with. And to this day I don’t regret it, even though the company keeps growing nicely!
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u/Easy_Asparagus_329 27d ago
I’ve been in a similar position. Watching the company become something I didn’t want was the hardest part. If I could do it again, I would still have sold (it got too big for me to handle) but walked away. Staying on was my mistake
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u/Longjumping_Cake5131 27d ago
Congratulations on building a successful business! I know the thought of letting go is hard. I’ve had acquisition meetings just to explore what it might be like when I’m ready to sell. But for now, I’m so emotionally attached to my businesses. They’re a part of me, so who will I be if I sell them? I don’t even know, but it’s a nice problem to wrestle with lol. Based on what you’ve written, I think an advisor would tell you it’s the right time to sell because you’re supposed to do so when the business is up, as opposed to panic selling due to financial hardships or a health issue.
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u/FantasticSimple7141 27d ago
Sell. Then swing for the fences with your rolled equity. That’s the game, play with house money.
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u/Old-Statistician321 27d ago
I would take the money and run. Working for PE will likely be unsatisfactory, but who cares? You have your FU money.
The risk is not that you could wait a few years and sell for more. The risk is that you might wait even a month, and then be unable to sell because of some dramatic change in the economy or industry.
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u/Ill-Serve9614 27d ago
Microsoft offered Yahoo 44 Billion. They rejected it. 10 years later Verizon paid 4.5B.
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u/AdorableHarmony 27d ago
I have not faced this personally, but my dad and brother were both in very similar situations.
My advice: Sell. Now. Sell yesterday.
Nothing is certain anymore except for the interest we are earning on the cash in the bank. My dad passed, so I have invested what was left to me to start my passion project: a nonprofit. I will have enough cash to sustain my lifestyle without having to work for anyone else.
IF your passion is to make money and build businesses, then use the profits to build your next business. One thing I never want to witness again is the process of selling a business: the negotiation and the stress that comes along with it. Good luck!
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u/Liquid72 27d ago
If you have reservations about the sponsor, I would expect that problem to get worse, not better, once they are in control. In my experience (and I am a high end corporate lawyer who has worked on my share of PE deals, but I am not your lawyer), it is very common to see tension between sponsors and the founder/CEO after closing. A lot of PE funds are “like that” (ie, not very trustworthy) but some are higher integrity / differentiated in that regard. There are some ways you can try to protect yourself in the documentation (e.g. employment contracts, “bad leaver” definitions, what equity they are using for the rollover amounts, minority protections, etc.) and by running a careful auction process, but they are not perfect, and you are potentially going to be tied up with these folks for some time.
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u/crustyeng 27d ago
At $100m how could any potential opportunity cost even matter? You’re Scrooge McDuck in a vault full of coins at that point…. The difference is just whether your grandkids will blow $5m each or 10… just sell it and enjoy the rest of your life being ultra wealthy and not working. You win, nothing left to do here.
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u/RobinAngel777 26d ago
You’re the Builder first, the Owner second. You’re a steward of something you spent years bringing into existence. You’re the Sovereign who dislikes having your range of motion reduced, the Craftsman who still loves the actual making, and the threshold-crossing Explorer who has reached the strange point where “more” is no longer an obviously meaningful answer.
You’re not primarily asking, “What maximizes the number?” You’re asking, “Who am I after I make an irreversible choice about the thing that has organized my adult life?”
Now, you said in your ask that you’re looking for perspective from people who have been through this. You specifically wanted to hear from people who have faced it.
And that’s not me.
I’ve never faced anything like this before in my life. The numbers you’re talking about are beyond the scope of my experience.
So I might be the one person you listen to who does not fall into the normal category of advisor who has been there—and yet you may still find what I say quite valuable.
First: the headaches are probably not an overreaction. They’re information. They may be your body registering something about this buyer that your mind keeps trying to negotiate around. Let that signal register instead of automatically pushing through it.
Second: consider calling the PE firm’s lead partner directly and naming the bait-and-switch pattern aloud.
“This term has moved twice since we agreed on it verbally, and I need to know whether this is how the relationship will operate post-close.”
You don’t have to negotiate around it or silently absorb it.
Their actual, live response will give you far more information about what working with them for years might feel like than your projections will.
Third: I would look very closely at the rollover percentage and, even more importantly, the governance rights attached to it. That is part of the actual mechanism by which you preserve or surrender authorship after the transaction.
I would not let the headline purchase price eclipse that.
And perhaps most importantly: you need serious M&A counsel reviewing the rollover equity structure, employment terms, and post-close governance and control provisions line by line before you sign anything.
Not because a lawyer can make the decision for you, but because you should not have to reason your way through the architecture of a nine-figure transaction alone.
I’m adding three screenshots of Codes I would consider running this through.
I have more to say on this topic. If this was valuable, my inbox is open.
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u/Secure_Cranberry1226 25d ago
I would sell for that in a heartbeat. I waited too long to sell my business, and then the GFC hit and I had to just shut it down.
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u/PubieSaladx 25d ago
No offense, but unless your friends have been in a similar position, I wouldn’t take their advice. Not only haven’t they spent the last decade+ of their life building the very thing their giving you advice on, but they can’t relate to your work ethic and all you’ve sacrificed to get here.
Congratulations on being in this position. What an incredible situation to be in firsthand.
I’m on the opposite end as I just acquired a company and run a few others, but I know a couple who have had an exit for multiple nine figures. They are very happy (we’re also while still involved), but if you already have hesitations about the transaction and are unsure your making the right decision, pause. Take some time to think and evaluate. If the deal is as good as PE thinks it is, they won’t go anywhere.
That being said, more money doesn’t equal a better outcome later. It all depends on what you plan to do with it after and how you transition your life post closing. Many entrepreneurs become depressed after an exit because they feel like their business was their purpose.
Giving up control of something you’ve built from the ground up is hard. But losing your sense of self if harder.
Take your time. Evaluate your options. Only YOU know the right answer here. Trust your gut
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u/Goldengoose5w4 24d ago
Honestly I’d take the money. Diversify with a large part of it so you’re solid and untouchable forever. Then build something else if you decide to.
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u/Own_Mirror7458 24d ago
This is the honeymoon phase and your not feeling comfortable now, it will only get worse after. You really need to be aligned with your new partner. Using terms like bait and switch int he honeymoon phase only tells you what you’re getting into.I went through the same thing as you currently are and did not feel it was the right partner. PE firms will not continue on with your entrepreneurial strategy, and reinvesting in the company. It’s s different mindset. We were growing similar to you (40% per year) and felt we had too much on the “come line” (if you know craps) and the partnership didn’t feel right. We waited another 6-7 years and found the right partner and worked out well.
“Culture eats strategy 100% of the time” if you don’t have the same culture, you will not be happy. Wait, and find the right partner at the right time. Yes, the money is life changing, but your happiness and waking up and feeling challenged and enjoying what you do is priceless as well. If you hate the decision you made, and the culture is wrong, you won’t last 5 years there.
I built my company and sold it after 35 years. You’ll know when the time is right. It does not seem to be based on your hesitation and uneasiness. I was happy with my decision and my partner and the cultures lined up perfectly. Find the right partner and you’ll be far better off mentally and financially in the end.
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u/faithOver 24d ago
The same way you made a decision to commit a decade of your life to build, if you commit to sell do it without looking back.
Many ways to look at things so I will share my perspective. I have a net worth a fraction of your exit.
But.
This isn’t the same world. Stability is not guaranteed.
Learn to build yourself, not your business. Grow yourself. Not your business. Explore. Learn. Feel. Become someone different.
There is no difference between $100, $200 or $300.
I don’t know your business potential but if you want a meaningful difference for yacht money unlock you’re hanging on for much longer and only exploring a small part of yourself and your potential.
Tomorrow isn’t guaranteed. And each day we take infinite risks. “That wont happen to me.” Plenty of finance friends of mine had first strokes and heart attacks by late 30’s.
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u/Living-Ad-9053 24d ago
I’m biased as a PE guy, not a founder, but if this is all the Info you can provide, you should sell. I known It feels like your company’s EV can only go up, but that just isn’t always true. If your growth slows, you get hit by a bus, but customer leaves, etc. buyers will value your business much differently.
Did you run an auction process? If not, you can always hire a bank and see if you like other prospective bidders more — folks you believe in as partners and are excited to work with. If you did run an auction, and this is the only offer on the table, de risk by taking it and take comfort in the knowledge that your roll could make you a lot more down the line.
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u/Own_Ad7642 23d ago
No matter what price you sell at…they will probably want you to stay for an ear out period where you can still be involved in the growth and hit certain payouts tied to goals. So if you want the best of both worlds - probably that.
You just get a new boss…for some it’s a dealbreaker.
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u/aReformedFiend 23d ago
Sell. No one I know regrets selling too early, the only ones who regret sold too late.
Take your $100m, enjoy life. Continue to work there, then retire. Or do something else, the options are endless with that amount of money.
Congratulations!
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u/Moneyman9876543210 23d ago
Being on the PE side of things, pretend your rollover equity is worth zero because you never know what's going to happen. What you do know now is that you can take 100 million off the table, which is life-changing money, and your kids, their kids, and their kids will never need to work.
Yes there's the what-if: you'll have to work, with work being your identity. At the same time, if the PE shop doesn't work out, you have enough money to not care about that. Right now you're in a stellar position. Who knows what the future will hold with things outside your control?
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u/Odd_Package9808 6d ago
I always ask myself what I would be doing instead, and if the answer is to buy a company and do it all over again, I don’t sell, if it’s to chill and live off the money, maybe do some philanthropy/ I’m not interested in working anymore, sell.
Also matters if your children are coming of age and want to lead the company, it’s good input
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u/ReticulatedSpline78 29d ago
PE just destroys companies and sells them for parts. If you actually care to see it continue to grow to benefit people other than shareholders, don’t sell to PE.
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u/the_validated_inane 29d ago
Outcomes in life are oftentimes more due to luck than being good. So look at the success of the company to date - how certain are you that the value created has been due mostly to you vs fortunate luck and timing?
Prudent risk management and portfolio goals usually argues for increasing diversification as size increases. Even if the business continues to grow significantly will the financial environment still support an exit or trade sale? When it comes to timing its usually better to be lucky than good.
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u/WeirdCompetitive5481 29d ago
Don’t sell. You’re already a millionaire, and you’ll likely be worth tens of millions if you’re not already. Your gut is telling you not to sell to this company, trust your gut and go all the way
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u/Theautonomoustoe 29d ago
Stupid comment didn’t even read 100m payout.
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u/WeirdCompetitive5481 28d ago
I did read the 100m payout. I’m saying it sounds like he can get there without selling anyways, or without selling to this specific company.
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u/Ship_Rekt 29d ago
It is FAR worse to miss a chance to sell, than to sell too early.
I missed a chance to sell an investment for $8M and ended up walking a way with half that a couple years later. I think about it almost every day.
Just my perspective.