Most of the time when a business owner is selling his or her business, the focus tends to be on valuation. And this makes sense. There are many ways to value a business. But some business owners move beyond purchase price, and focus on more subjective issues such as outcomes for employees, customers and the community. These business owners – lets call them Heart Entrepreneurs – tend to have dedicated their business career and the business they have built to something more than just profit making. When it comes to selling or buying a business with a heart, there are a few things to keep in mind.
Businesses with heart may be perceived as “valued” less, but do not lose heart. Popular thought is that a social enterprise or at least one that has a heart is less valuable than its “heartless” peer. In the long run, there is no way to prove or disprove this belief since each business actually is unique in its value proposition. Less purchase price may be worth keeping jobs in a specific town or region, keeping a certain workforce employed or making sure that a certain portion of the profits of a business stay dedicated to a social good. One thing to remember is that if the business has value, part of the value is a result of the heart entrepreneurs’ choices and decisions.
Make sure what puts the heart in your business is documented as part of the sale. It goes without saying that if there is an aspect of your business that you value and that you want to continue after you sell it, make sure all of the legal documents related to the sale of your business include details regarding how these aspects of your business must continue after you are out of the picture. Don’t let the lawyers tell you are crazy to be worried about this stuff. If it is not agreed upon in writing, your wishes will not be honored.
Second act careers or businesses give you another opportunity to put your heart into action. Even if a heart entrepreneur cannot sell his or her business with its heart intact, there is always the second act. Many business owners are just not done after they sell their business. When considering a second act career, think of it as another opportunity to continue the heart that was in your original business that might not have made it through the sale process.
For almost 20 years Kim Lowe has lawyered from the trenches. Kim lawyers from experience, using her knowledge of the law and understanding of how both for-profit and nonprofit business enterprises operate.