In April my little consulting company turned 23. Yes, that is a lot of PowerPoint! 23 is not a particularly momentous number, so I don’t expect any cards or gifts, and we won’t be throwing any parties. But I did want to share some reflections on what being a founder means to me and what I see with other founders in our project work in the Private Equity world.
Most of the time I don’t think of myself as a founder. That may be because my consulting business is as much a trade that I engage in alongside 20 collaborators as it is a business. But I did start it, I do run it for profit, so I guess it adds up. Including my stint at other firms I have been in this trade for 26 years, and while I had some wobbles in the middle, I am happier and more settled in my craft than ever. I came to the realization some time ago that this is what is most natural to me. I may not be better at this job than others are, but I am sure better at this than I am at anything else. By a long shot at that.
Over the years I have been approached to sell my firm many times. I came close in 2009 (that was a funny time you may remember) but thankfully I resisted and continue to do so. The reasons are quite plain and consistent. I love what I do. As I said above I don’t necessarily do it better than others, but I do know that nobody quite does it like we do here at SATOV. That gives me tremendous pride; I would never give it up for anything. I love the freedom I have to manage my life as I need. And I should probably admit that I am just not wired to ever have anybody tell me what to do. Know thyself, I guess.
I have heard all the arguments to sell from potential acquirers and some friends and advisors. The attractiveness of a one-time payout is significant when you consider the theoretical risk of the ups and downs over the next 15 or 20 years. I could retire sooner and have the freedom to do what I want. Don’t you want to secure your legacy and be part of the elite group that has a ‘big exit’? Don’t you want to leave your kids a sizable inheritance? Etc, etc. I care not. I make enough money to live the life I want, including going to Wimbledon some years. I have evolved enough (finally…it took time) to realize that any more money has diminishing value and therefore not worth sacrificing any part of my job satisfaction. I cannot dream of retiring any time in the next 10 years or more. What the F would I do every day? I don’t need my business career to culminate in an exit; I am self-actualized as I am. I don’t have a goal of leaving a big inheritance as I know that the happiest people are the ones who made it on their own. I will probably one day transition the business to the capable team of managers that I carefully selected and trained, who I know will carry on the SATOV way. And if not, when I am ready to die (or a couple of years before), I will lock the door and go home.
I spend a lot of time with business founders. I meet them in the process of being acquired as we are engaged for commercial diligence, or afterward to help them grow the business toward a second exit. We secure these mandates partially because I relate well to these founders. They see me as someone who has walked a mile in their shoes, having run my own businesses (consulting plus others before and concurrently). Consultants at big firms intellectually understand what a business owner does but they have never felt what it is to have your house on the line or your own name on the door, or to be truly responsible for the livelihoods of their employees.
Most of these founders have made very clear-eyed decisions about the decision to transition their business, and the implications. Their businesses are large and need new capital, so they knew this was the best option for all involved. They made a thoughtful decision about what is best for them and their family. They cemented generational wealth. They are eager to be part of something different, at least for a while. They are done with carrying the burden of being the ultimate decision-maker. They may actually have something to do when they retire. Most importantly, they understand the trade they made when they cashed the cheque. They had a partner in a private equity fund look them in the eye and say ‘I am buying this business, so you get to be rich but also some things will likely change. I will support you running it as long as business performance meets our objectives. You can still make the decisions here, but I chair the board and that comes with some veto power. If you want to leave, you will do so nicely and ensure the next generation of leaders supports our vision. This may be uncomfortable for you at times, but it is non-negotiable.’ The funds that I work with do this well. They know when to spot an entrepreneur who is truly ready for a different chapter and a different dynamic. They have a playbook for how to work with them. They create value together and make everyone richer. They have the discipline to walk away from deals when the founder in question is unwilling or unable to play the role that they need them to play. They know how to deal with a founder who is struggling with the changing dynamic. These are not easy things to be great at, but they rank near the top of what this industry does.
There may come a time when my perspective changes. The market can change, I can get sick, I can pick up golf and want to do that a lot (yes, that is a joke) or something else I can’t predict right now. In the meantime, I will keep doing what I do and keep loving it. I will remind my clients that if they spot a founder like me who says they want to sell their business, they should run like hell.