Jumping The Shark: Mastering The Art Of Timing In Business And Beyond

Brad Standridge

By Brad Standridge & John McAlister of The Beringer Group

In the world of business and sports, timing is not just a factor; having effective timing is what distinguishes industry legends from the standard. Knowing when to step away, to pass the baton, or to sell can cement a legacy, ensuring you and your business are remembered with respect and admiration. This principle holds true whether you are discussing the careers of esteemed athletes or the transitions of private companies.

Legends Know When To Exit

Barry Sanders, one of the most electrifying running backs in NFL history, shocked the world when he retired at 30, still at the peak of his game. Sanders left fans longing, preserving his legacy as an untouchable talent whose potential felt unlimited. Contrast this with Brett Favre, whose career, though illustrious, was spoiled by retirements and un-retirements, leaving a legacy that included moments of indecisiveness and decline.

The business realm offers its parallels. Consider the owner of a successful distribution company, who received a lucrative offer for his company just before the 2008 financial crisis struck. Despite the tempting offer, he hesitated and ultimately decided not to move forward with the sale. Little did he know, his timing couldn’t have been more unfavorable. As the crisis unfolded, the value of his company plummeted, and it took a painstaking 10 years for its value to recover to the level of the offer he had once received. This story serves as a poignant reminder of the critical role timing plays, not only in navigating market cycles but also in seizing the optimal moment to exit at the height of one’s career or business trajectory.

John McAlister

The Art Of Staged Exits

The story of our recent client John, who wasn’t quite ready to leave his life’s work, demonstrates the effectiveness of a strategic staged exit. By opting for a leveraged recapitalization, John managed to pull out a significant portion of his company’s value while still maintaining control. This maneuver allowed him to remain involved in the business while securing his financial future. Over the next five years, he continued to steer the company toward greater success. Finally, when he decided it was time to fully step away, he did so on his own terms, capitalizing on a valuation that far exceeded what he initially withdrew. This story exemplifies the delicate balance between financial wisdom and personal attachment, showcasing a path that allows for gradual detachment without sacrificing control or legacy.

Unpreparedness: A Cautionary Tale

Conversely, the story of a business owner who was approached with a once-in-a-lifetime offer serves as a cautionary tale about unpreparedness. Caught off guard and unprepared, the business owner scrambled to put his affairs in order, but it was too late — the deal fell through, leaving him with regrets and wondering what might have been. This story serves as a great reminder for businesses to always be prepared and well-organized. It highlights the importance of keeping the business in a state that would appeal to potential buyers or investors, ensuring that opportunities for growth or lucrative deals can be seized without delay. Additionally, it emphasizes the significance of personal readiness, showing how being mentally and operationally prepared can prevent missed opportunities.

The Complexities Of Family Succession

Family-owned businesses face unique challenges when it comes to transitioning from one generation to the next. These challenges are often intensified by the emotional ties and complexities of family dynamics. Consider the story of a father who held onto control for too long. Despite his advancing age and the need for succession planning, he hesitated to pass the reins to the next generation. This reluctance caused tensions to simmer within the family, leading to conflicts and disagreements. As a result, the business suffered from strategic missteps and missed opportunities, ultimately harming the business he worked so hard to build. This narrative highlights the importance of succession planning and the significant role timing plays in the process. Delaying the handover of leadership can not only jeopardize the business’s future but also the family’s harmony.

The Ongoing Process Of Transition

Treating a transition as an ongoing process rather than a single event can facilitate smoother transitions, such as passing leadership to the next generation, preparing for a sale, or structuring a leveraged recapitalization. This approach involves constant monitoring, staying aware of market trends, understanding internal business dynamics, and acknowledging personal readiness for change.

By adapting to changing circumstances, identifying emerging challenges and opportunities, and maintaining a constant state of preparedness, businesses can greatly improve their transition outcomes. Similar to how athletes continuously train, evaluate their performance, and adapt their strategies, business owners must also foster a mindset focused on determining the ideal timing for transitions.

Consulting a professional can help simplify the intimidating process and ensure suitable timing. Their expertise can provide valuable guidance while trying to navigate the complex financial, legal, and operational aspects of transitions. They can offer strategic insights tailored to the specific needs and goals of your business. With support from a professional, business owners can confidently make informed decisions, mitigate risks, and maximize opportunities for success.

Conclusion: Timing Is Everything

The stories of Sanders and Favre, much like those of the above business owners, teach a critical lesson: the timing of one’s exit can profoundly affect how one’s career or business legacy is remembered. Exiting too late can tarnish a legacy, leaving a memory of decline rather than dominance. Conversely, a well-timed departure, whether from the sports field or the boardroom, leaves a legacy of wisdom, foresight, and untarnished success.

For business owners contemplating the timing of their transition, the message is clear. Whether it’s selling at the market’s peak, executing a staged exit, or smoothly transitioning leadership within a family, the key lies in preparation, awareness, and the courage to act decisively at the right moment. Legends, after all, are not just remembered for what they achieved but for knowing when their journey had reached its high point, stepping away with their legacy forever preserved at its peak.

John R. McAlister and Brad Standridge are VP’s with The Beringer Group, which since 1979 has guided over 2,200 family-owned companies through the complexities of transferring the business to the next generation or selling the company in the future. For more information, call 813-793-6780 or go to www.theberingergroup.com.