A Must Read For Anybody Who Shares Ownership in a Business

By: Patrick Ungashick

This is a must read if you share ownership in your business.

Skip this message if you own 100% of your business.

Here's the quick version of a long, painful, and true story.

Two gentlemen, let's call them Al and Bob, co-owned a real estate consulting business, ownership split 50/50. They were good partners, and built a successful business together.

In the early 2000's, a potential buyer came along and offered $10 million for their business in an all cash deal. Al, age 60, was eager to sign. He already had some money put away, his wife had a pension, and their beach house had no mortgage. Bob, age 45, refused to sell. He had three kids, none yet out of high school, and not much money outside the business. If he sold, he would immediately have to find a new job or start a new business all over again. Al and Bob could not agree. Eventually, their potential buyer went away.

About a year later, another buyer came along and offered $11.5 million. Same result-Al said, "Where do I sign?" Bob said, "I can't afford it." Both men grew frustrated. They each owned 50%, and neither could sell without the other's consent. Eventually, the second buyer too went away.

Similar story the following year, a third buyer came along and offered $12 million all cash. The real estate market was booming. Al wanted to sell. Bob did not. They argued. They fought. Neither would give up control. Neither owner wanted to go into debt to buy out the other guy. Eventually, the third buyer too went away.And then, the real estate market crashed. Their business's value fell by 90%. Buyers stopped coming along. Al and Bob remain co-owners to this day.

About 70% of small to medium sized privately owned businesses have more than one owner. Planning for and achieving a successful business exit can be difficult. If you share ownership in your business, achieving a successful exit can be even harder. It is easy and common for different owners to have exit goals which are incompatible with each other. Two or more owners with different ages, income needs, work habits, family situations, and legacy aspirations will almost inevitably have different exit needs and plans. In the best case scenario, this causes friction and stress. In the worst case scenario, like with Al and Bob, lack of co-owner alignment outright blocks everybody's ability to achieve a happy exit.

In our experience, co-owner alignment is the biggest issue that nobody is talking about. Concurrently baby boomers are exiting in greater numbers which makes it critical to address co-owner alignment challenges to achieve a happy and successful exit

In our exit planning consulting business, we help clients who have multiple-owner businesses create successful exits-for everybody. Here is the NAVIX Co-Owner Alignment Assessment tool to evaluate 33 different areas of potential owner alignment. Use this free tool to determine whether you and your co-owners are on the same page on the business. Consequently, you can take positive action today to create alignment for your future exit plans. If you do not achieve alignment, you may end up like Al and Bob.

  • There are no suggestions because the search field is empty.

Subscribe to The Exit Playbook Blog:

Recent Posts:

How to Talk to Your Employees About Your Future Exit white paper
What Should You Do with Those Unsolicited Offers to Buy Your Business? white paper
New Call-to-action
New Call-to-action
For more information on exit plan strategies, register for our next complimentary webinar.
Ready to Discuss Your Situation? Schedule a complimentary, confidential 45-minute consultation with a member of the NAVIX team today. Contact Us to Get Started
Books by Patrick A. Ungashick | Order Now