What Worries CEOs When They Exit

Whenever I speak to CEOs I usually get the impression that they totally have their act together and do not experience fear, worry or regret when running their companies and leading their teams.  And I guess that for the most part, that is true because in their predominant domain as the leader of their business, they live and work “comfortable in their own skin” – fear does not exist.  Or does it?

So, I went hunting for evidence about the fears of CEOs to learn what others had studied, learned and said on this topic.  I found a few well written pieces (though interestingly, not very many).  I found one written by Kevin Daum, an award-winning and bestselling author, marketer and speaker, a couple of years ago that caught my eye the most.  The article is titled, “How Bill Gates and Mark Zuckerberg Conquer Fear to Succeed”.  Kevin cites 13 fears that CEOs have to “battle every day in order to reach success”.  Nice.  Only I want to focus on those that I know are fears that CEOs should worry about when they engage in the complex, confusing and convoluted process of selling their company.  Their exit from their business is a process vastly different than when they are fearlessly doing their “day job”.

Taking from Kevin Daum’s article, here are the fears I believe CEOs face in their exits and why they indeed need to worry.

  1. Fear of Failure, Inadequacy, Fraud, Embarrassment – Fear of Failure is obviously easy to understand. I don’t like it either.  Fear of Inadequacy is wondering if you are good enough, smart enough, or rich enough.  Fear of Fraud comes from having an overblown ego or exaggerating your capabilities.  Fear of Embarrassment is rooted in your own broken pride and being shamed before all.

So why worry about these during your exit?  First and foremost, your exit could die; there is no closing at all.  It happens a lot.  Maybe only 15% to perhaps 25% are considered “successful” exits, i.e. executed as expected.  Second, your exit gets done but with a poor pricing result or with terribly tough terms – maybe even both.  Third, you get burned by breakdowns in your sell-side due diligence.  How?  By not knowing your business deeply and completely or not knowing what you as CEO should know.  Having one deadly surprise after another emerge to slice your hard-earned value to shreds.

  1. Fear of People, Time, Market – Fear of People happens when you do (or try to do) most everything in your exit by yourself. Fear of Time is all about your desire to control time (as well as controlling people and process too).  Fear of Market is wondering about selling now vs later all influenced by your FOMO (Fear Of Missing Out).

So why worry about these during your exit?  Driving an exit process largely on you own is physically, mentally and emotionally draining, especially if it is your first exit.  Doing so will result in the deal value dropping right in front of your eyes while the risk of your deal crashing rises dramatically.  Plus, the “Great Wall” you build with the help of these fears will isolate and alienate you from your team, possibly leading to the loss of some of your best people too.

  1. Fear of Selling, Futility, Leadership – Fear of Selling happens when you feel that you are pushing your company on to someone else. Face it.  Selling what you have passionately built for no matter how long is tough to do.  Fear of Futility emerges because we do not want our long, hard journey and what we achieved to be quickly forgotten.  We believe that we built our business as our legacy to make a difference in the world.  Selling requires letting go – often that’s so very hard to do.  Fear of Leadership rises when you realize how much greater is the weight of responsibility and required action in the sale of your company in contrast to when you started it.

So why worry about these during your exit?  “Short arming” your commitment to selling and achieving an optimal exit for you, your team and your family will show up in many ways.  One way is by your own lack of urgency which kills the momentum necessary to move the process forward and get to the close, especially when you lose the buyer’s interest and they walk from your deal.  A second way comes from not immediately and carefully hiring the right deal lawyer and the right exit advisor to get you past your fears and close the deal.  A third way happens when your lack of commitment shows up as evidenced by losing key team members, competitors raiding your customers/clients, and making mistakes that blow back on you with problems, liabilities and cut value.

What is the antidote for these fears?  Start the exit process early and well ahead of when you want it closed.  Get expert help to learn how to drive and survive the process.  Take the heat, be smart, and do it right.  Face these fears head on and commit yourself to close the deal.  Make it happen!

About Jack Warnock

Jack Warnock is an M&A pro and a consigliere to CEOs who are exiting their businesses. He will ensure that the outcome is optimal, the best value is achieved, and the transition is smooth, all while you and your team continue to effectively do your day job. Jack is a trusted resource with proven knowledge about how companies work; how ownership changes; how to buy businesses; how companies are sold; and how owners win.

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