Prepare to sell your business

Ron Plashkes wasn’t planning on selling Alumni Computer Group, the law office accounting and case-management software company he co-founded in 1982.

So, when Lexis Nexis came calling in 2005 with an offer to buy, Plashkes was admittedly ill-prepared for the sheer amount of work it took to ready his business for the transaction.

When the buying process started, Plashkes and his business partner were caught off guard when they couldn’t readily deliver documents requested. While growing to 70 employees, with software used in 30,000 law firms worldwide, their paperwork had grown in to disarray.

“Many companies don’t have the resources to dedicate to the sale process and simultaneously keep their businesses moving. I have very good friends who spent so much time on the sale of their companies that their actual businesses started going down,” he adds. “My partner and other management picked up the slack so I could dedicate myself to getting this sale done. But that’s because we had 70 people. If we’d had 10 people in that situation, I don’t know how we would’ve done it.”

Selling to a third party is one of the most common exit options for entrepreneurs and it’s done for a variety of reasons. You’ve taken the business as far as you can. The business needs a fresh injection of corporate expertise and capital. Your product has reached market maturity and it’s the right time in its business cycle to be sold. Or you simply need a change.

“There is quite a large group of baby boomers trying to figure out what to do with their businesses. The private equity guys think a lot of them will be coming up for sale and they’ll have an opportunity to buy them. So that’s certainly one exit for those entrepreneurs going forward.” Gary Solway, managing partner of Toronto firm Bennett Jones

For Plashkes, change was calling. “Twenty years of the same thing, I needed a break,” says Plashkes, who lives on an eight-acre property outside Stouffville, Ont. “I knew I didn’t want to go into something where it would be mission critical again.”

Once the deal closed, adjusting to sudden retirement proved more challenging than Plashkes thought. “You’ve been getting up, worrying about your business 24/7. When you don’t have to worry about that, it is quite a shock to the system,” says Plashkes. “So my wife and I decided to dedicate a few years of our life to heavy traveling. The next month we were rolling down the Colorado River in the Grand Canyon.”

The getaways gave Plashkes and his wife important time to think about what to with the proceeds of the sale. Plashkes’ accountant, Jerry Cukier, coached Plashkes that those who come into a lot of money quickly, whether through inheritance or a business sale, can be paralyzed by the process of dealing with that windfall. He recommended a few financial advisors for Plashkes to interview then offered his own—relax.

“The key is to take your time; don’t rush into anything,” says Cukier, an accountant with Soberman LLP in Toronto. “You don’t need to make a seven, eight, nine percent return right away. You could still make a one or two percent return in a GIC, so go slowly.”

With the help of professional advice, Plashkes forayed into philanthropy—he and his former business partner donated to their alma mater, the Ivey School of Business in London, Ont. and Plashkes and his wife made a sizeable donation to a number of children’s charities. He keeps one foot in business, primarily through York Angel Investors, but mostly he’s happy bee-keeping and vegetable gardening, his latest new ventures.

This article was originally published on capitalmagazine.ca.