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Strategic exit: In selling a business, plan carefully and consider all options

Up to 75% of businesses fail to be sold successfully. GardenWorks’ John Zaplatynsky tells how his succeeded.
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John Zaplatynsky knew it was time to sell his ownership in GardenWorks, the business he’d co-founded in 1984. Like many boomers, he wanted more opportunities with family and for travel and reconnecting with friends. But he also wanted to avoid the dreaded seller’s Monday-after syndrome. ">It would have been very difficult to just walk out on Friday night and wake up Monday morning and say, ‘Oh my God, what do I do now?’” Zaplatynsky says.

Traditionally owners sold, then had to get over the abrupt life change cold turkey. Reflecting today’s growing awareness that there are options – that a departure doesn’t have to mean a break – Zaplatynsky opted not to walk out. Instead, following a carefully thought-out two-year plan, he just stepped somewhat away. He sold 53% of his interest in GardenWorks, became company chairman and stayed involved in the wider industry, while gaining the personal time he’d sought.

Zaplatynsky’s experience, which he’ll share at the November 29-30 Business Transitions Forum in Vancouver, will hearten business owners thinking of selling – but worried about how to go about it. And with statistics showing up to 75% of businesses fail to be sold successfully, owners have good reason to be cautious, says Dave Tyldesley, vice-president of the forum’s producer, Cube Business Media Inc.

The Business Transitions Forum (BTF) will showcase different ways and degrees of relinquishing control. The goal, Tyldesley explains, is to help owners decide what’s right for them. “We wanted to build the most comprehensive exit strategy event for business owners in Canada. We set out to demystify the process of transition from start to finish, paying close attention to topics such as increasing business value, tax and legal considerations, family business succession strategies and more.

“What makes BTF different is that we’ve brought many competing advisory firms under one roof so the business owners in attendance will get a variety of diverse opinions in one place.”

Variety is important because potential sellers have a variety of motivations. “One of the groups that attends the Business Transitions Forum are ‘entrepreneurial sellers’: owners intending to build a business that can be sold in the future. Maybe they’ve sold businesses before or they are simply aspiring to sell one day. They have many years ahead of them and are ‘building to sell.’”

Boomers to transition $4 trillion of businesses

The second group is boomer retirees like Zaplatynsky. It’s a demographic so compelling – and when are boomers not? – as to be a main reason for launching the BTF event. Tyldesley cites a stunning PwC finding that boomers will transition $4 trillion of businesses over the next 15 years. “They may have built a business over 20 or 30 years. They often have emotional attachment to their businesses, and that can often be the biggest hurdle. Their age, health or family considerations are motivating them to think about transition.”

Zaplatynsky’s advice? Decide on your date of departure – or semi-departure, as the case may be – two years ahead. “That gives you a pretty reasonable timetable. I basically sat down and documented all of the things that I did and all of the issues we needed to worry about in terms of the company going forward. And then my four partners and I met, talking about the progress and the hand-off responsibilities.”

Leanne Johnson, who’s now GardenWorks’ COO, shadowed Zaplatynsky for much of his operational store management issues. Same with the two partners who would take over other areas of specific responsibilities: “We spent a lot of time together out visiting suppliers and visiting stores and going to industry events together. I passed on as much as I could in terms of my knowledge of the company, how the industry worked, who were the people we had to have good relationships with.”

Other retiring owners might not need two years, he notes. “Our business is so seasonal, very different at different times of the year. In our peak season, spring, we’re running flat out for four months, so we decided to go through that twice during the transition because every spring seems to be different. The weather’s different, and the weather’s the biggest impact on our business.”

Whatever your business, document the kinds of things you as owner do and who will take over what responsibilities, Zaplatynsky urges. “Then sit down on a quarterly basis and track the progress, talk about it and make sure that the transition is working smoothly.”

Zaplatynsky timed his ownership exit for August, the end of GardenWorks’ fiscal year and also the slowest business time of year. With his family he then went on an African safari.

For owners unsure how to start off the transition process, Zaplatynsky suggests the best way is to talk to experts in the field, those who live and breathe transitions every day. BTF will certainly provide that chance, along with helpful stories of entrepreneurs like him who have made successful transitions.

Word has got round about Zaplatynsky’s smooth transition. Now, as well as his chairman role with GardenWorks, he does consulting work, helping other companies with their transitions.

So, Zaplatynsky works but works less, and on his own terms. His career isn’t unlike his favourite flower, the perennial geranium, which ignores conventional end-of-bloom dates and just keeps sprouting anew.

The early-bird deadline for registration to the Business Transitions Forum is October 28.