Your Business Is Worth More Without You
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She Built It For 22 Years. Made Herself Replaceable On Purpose. Then Sold It.
Most conversations about selling a company stop at the wire transfer. The money hits, everyone claps, roll credits. But Christine’s book, Mastering the Exit Gauntlet, is about the part that comes after. What happens to your identity when the inbox goes quiet on day one. What it costs to be the only woman in the room for those 22 years. And the reframe that keeps coming back: everything you get after closing day is fun money. And what you do with it is the actual point.
If you still believe your business is only worth something because you’re in it every day, stay for this one. Christine is proof that it’s worth more without you.
When The Business Becomes Part Of You
I think the thing that we’re all focused on is the business is hard. Running a business is hard. Growing a business is hard. And then when you sell it’s like, oh great, I take my money and run. That was totally not Christine’s experience.
When she was building the business, did it feel like a company or did it feel like a part of her? Yeah, more the latter. She has the logo tattooed on her left arm. That is a part of you. It was very much a part of her identity. So it was a big thing to let that part of her go. She’s still working through that.
That’s why she did a workshop, looking for what is that next. She’s better now, but she was a wreck after selling. And she thinks that came from a place of not being really ready to sell, which she talks about in the book. She really encourages people to think through it first. Don’t just take the first buyer call that comes in and say, oh yeah, this would be nice, I’m burnt out, I just want to be rid of this. Really figure out what you want to do next.
Because there’s going to be a hole. Even if you’re like, I’m ready, I’m totally ready, and then your inbox is empty on day one. That’s a weird feeling. There’s no Slack. There’s no one there. You have this whole other process in your life than where you were before.
It’s all good now. She loves the freedom of it. She told her husband she got three calls one afternoon and that was it, whereas before it used to be until 8 or 9 p.m. And you don’t realize how tired you are until you get out of it.
For a lot of people the business, especially women, becomes like their baby. It’s family. She had people with her for 20 years in some cases. She knew their spouses, their kids. And now she doesn’t talk to them the same way. They’ll pick up the phone but they’re not in your everyday life the way they were before. So it’s like a whole new social network. It’s a whole new reinvention of self and purpose.
Building With The Exit In Mind
Were you running a business with the intent to exit? Was that the plan?
About 18 years into the 22-year journey of running the company, Christine started talking to folks in the M&A landscape. A lawyer she knew said, Chris, it’s going to take you five years to do this. You’ve got to step out of the business more, don’t do client work, go sell, make yourself replaceable. So she did a lot of that, which actually turned into a better lifestyle too. She could go on vacation for a week without checking email.
And she’ll encourage your listeners to do the same. You should be able to step away from your business and go on vacation. Period. Many people cannot. That’s always keeping you in a hype cycle and a stress cycle. You never are truly off. She watched people on the beach on their laptops and thought, oh my gosh, that’s so sad. For the first 18 years, that was her on the plane, on the beach, with family, saying oh I got to go do a call.
She luckily had some good advisors who said, make yourself replaceable. Get to a point where you can take a two-week vacation and tell them they can spend $5,000 to fix any problem. Unless someone’s bleeding out or you’re losing your biggest client, don’t bother me. And it’s really interesting to see the dynamics that come up because the team then feels very empowered. They respect their role more because they’re like, I don’t need to report to my boss. I’m just going to go fix stuff.
From Solo To Scalable
She started as an independent consultant. Not scalable at all. It was her hours and only her hours. But the minute you start to bring in four, five, six people and they’re making you money while you’re not working in the business, that is freedom. That is total freedom.
She had started because she was hitting glass ceilings working in startups. She couldn’t find an agency that spoke fluent technology, so she decided to build that. She kept at about 30 years old hitting glass ceilings, losing VP jobs to 52-year-old men who didn’t know what they were doing. So she said, how bad can this be? I want to create a workplace that will be fair and just and people will love to come to work. I want people to say this is the best job I ever had.
She always thought she’d have a few people, but she didn’t hire people as W2s until about six or seven years in. She had 1099s inside a consortium, partners, freelancers that worked with her, and they’re also making you money. You don’t have the same obligation. For a lot of people, that model works really well in today’s gig economy.
And it used to be taboo to sell a company with all freelancers. Now you can do it quite easily. Not in California. California is the one state you have to be careful of.
What she found about six or seven years in was that people who are 1099s are not as invested in the business or the outcome. They can on a dime leave, you can on a dime let them go. So they don’t feel as part of the group. They’re not building the culture. So she brought in W2s at about that six or seven year point and scaled from there.
They were a very small team until about 2019 when she decided she wanted to sell. She knew she had to get the business to a size that was sellable, and that was about a million dollars in profit. It took 15 people plus contractors to get to that revenue and EBITDA profit point to sell.
And that was also the time COVID hit. They were in healthcare marketing. Everything went crazy. All the trade show budgets went into digital marketing and they were sitting right there. They were a remote team forever. So they didn’t skip a beat. Everyone else was like, this is insane, and they were like, this is normal. So that was a hockey stick up, and even as she went through the gauntlet of selling the business and had deals fall through, they were continuing to grow every year because of the lucky timing and the nature of healthcare and biotech during that period of time.
What Selling Actually Looks Like
You can be a $10 million net profit, $50 million business and still have challenges in the sales process. It’s easier the larger you get. You’re going to have multiple buyers fighting over you. But even very large deals go south. Owners don’t make their earnout because something changes in the industry. If you had sold in 2019 and you’re in the travel industry and 2020 happens, you’re not making your earnout.
A lot of this is luck and timing. If you’re looking to retire or want to derisk, it is all a matter of timing, but you can’t time it just like you can’t time the stock market. You just have to make sure you are happy with what you’re going to get at close, the money you’re going to get in that wire transfer the day you close, which is going to be some percentage of the total deal value. Make sure that’s your number and look at everything else as bonus. Because everything else is a variable after that.
If you’re only getting, let’s say, a million dollars at close, you’re paying at least capital gains tax. If you’re in California, you’re paying more. You’re getting anywhere between 50% and 67%, maybe a little bit more if you live in Texas or Florida. And can you live on that for the rest of your life, well invested? Are you waiting for that earnout? Do you need to have a seller’s note?
If you have a seller’s note when you sell your business and they have an SBA or something else in there, the bank gets their money first. Institutional investors get their money first. You’re at the bottom if they declare bankruptcy. So you have to look at everything else after the wire close day as fun money.
Her broker, who closed the deal for her, told the buyer: simple. She wants simple. And sometimes taking a little less money to get simple is peace of mind. Some people are willing to put it on black and ride out the earnout or take a lot of equity. Some are like, the money doesn’t matter to me, I just want my mental health. Some want every single dime. It’s a very personal decision.
Being The Only Woman In The Room
She had a very short chapter in the book about being a woman in this situation, and I’ve talked at nauseam on this podcast about women and venture capital, less than 2% of capital going to women-owned businesses. What was interesting was the transaction itself and being a woman decision maker in that transaction.
There’s definitely a proving aspect. Women have to prove everything. Guys get hired on potential or promoted on potential. Women get promoted on results. It was the same thing in the sale. One deal fell through during COVID because they couldn’t meet face to face. When they finally could, there was a very misogynistic vibe in the whole last diligence call. This was after going through diligence. The buyers had spent $250,000 with their legal team. She passed everything with flying colors in terms of financial results. And then they started picking apart things like, why isn’t it bigger? Like, you’re spending too much time with your kid.
That’s insane to me.
It was insane. The numbers are the numbers, guys. You’re not buying my lifestyle. You’re buying the business and the numbers.
Over the course of trying to sell for three years, she talked to maybe 200 people, whether they were potential buyers, brokers, or private equity. She spoke to two other women. Two. One was a junior analyst at a private equity firm. The rest were all men.
The private equity firm that bought her company wins top awards for being owner-friendly. They treated her fabulously. But she walked into a big boardroom in Dallas, feet hanging off the chair, everyone six-foot-six and above, and she was the only woman in the room. She had started the company 23 years before and was still the only woman in the room.
You almost have to play a role. Women tend to say too much. They tend to be more forthcoming with information. And the more information that gets out, the more there is for someone to pick at. She almost equates it to being in a courtroom: yes, no, answer the question, only answer the question, no other information. At the same time she encourages people to be authentic, because if not being verbal at all is going to make you so stressed out, don’t do that. You want to come across as friendly and confident and competent. But yeah, there’s this fine line of being friendly but being competent but being nice but being tough. And things like, don’t mention you took three months off to raise your kid. It’s a weird balancing act.
When exit advising women clients, she says: be yourself, but keep it direct. Keep it on point. Keep pointing back to the numbers. Keep pointing back to what you built. Keep pointing back to your team and who can take this over easily. Don’t get into a lot of the emotional stuff. It’s so difficult because women tend to emotionally merge with the business differently than men. In a lot of situations that makes them better stronger leaders, but in that negotiation room, it has its place.
Separating Your Worth From The Valuation
How did you separate your personal worth from the valuation of the company?
Still working on it.
She always tried to have things that meant a lot to her outside of the business. Whether that was sports, yoga, being a mom, being a wife. Things outside the business that mattered. And she’s tried to look at all the attributes that made her a good leader, a good business owner, and say, I still have all of those. How can I apply them to other areas of my life? Just because she’s no longer the CEO of Clarity Quest doesn’t mean she’s not a good organizer, a good culture builder, a good people connector.
She encourages listeners to look at what they’ve done well and where they can apply that to other things they’re interested in or have always wanted to do but business timing and obligations didn’t allow.
And it’s very easy for other people to tell you how much the business is worth. That’s a pretty cut and dry calculation of a range. It’s only worth what people will pay for it. But there’s a range of multiples of your revenue or EBITDA that any advisor can give you. And then a lot of people have to say: yeah, that’s what it’s worth. It means more to me, but this is reality.
She works with a lot of owners who want ten million. And she walks them through what it’s going to take to sell the business for that, whether they’re willing to invest the time and money. Some say yes. Some say, I’d actually take five. And she says: time is money. We’re not immortal. How much is it worth to you to have your time back?
What Money Became After The Sale
Before the sale, Christine looked at money as very transactional. Money came in every month, she was in control, extracting it out of the business. Very transactional. Money in, money out.
Since the sale, not having a paycheck coming in was really weird at first and kind of scary. But then her husband pointed her to their investment account and said, look at this, we’re fine. So she paid herself a paycheck out of the investment account every month because that made her feel comfortable. On the first of every month, that money comes from the investment account into the bank account just like the paycheck did.
And it became much more flow of the universe with money. She can now pay for people to have jobs because she goes to their restaurant, gets her spa appointment. She’s throwing money back into charity, excited to work with her alma mater’s women’s leadership committee. It affords her the ability to put money back in circulation and help others, and she doesn’t freak out about it.
She and her husband knew the number they needed. They don’t have the highest flying lifestyle, but they know exactly what makes them comfortable and they’d be fine. And that’s why she says people have got to know their numbers, because that changes your relationship with how you’re looking at money. Because just because you had all these zeros pop into your account one day doesn’t change the relationship you had with money. You could still be really worried about what’s going to happen to it.
The Relationships Nobody Warns You About
There are three categories of people when you exit. There are those who are joyous and genuinely happy for you, hold them very close. There are those who all of a sudden want to know what you can get them, the oh can I come stay at your beach house people. And then there are the jealous ones. And then even the people who are really authentic in your life can’t just jump on a trip to New Zealand you’re planning in January.
It’s a weird, uncomfortable dynamic when all of a sudden your relationship with money changes and your social network hasn’t. You can afford things but your friends can’t, and you feel weird about it. Big impostor syndrome for a lot of people. You’ve been on the same wealth spectrum with your friends your entire life and now it’s different and you feel awkward. Can they afford to go on this trip? Do you offer to pay? Some people are fine with that and some aren’t. It’s just such a weird conversation that nobody prepares you for.
Investing After The Exit
Selling the business changed her relationship with risk. The first close, the first money, was what they needed to retire and hopefully live on for 40 years. She’s still waiting for a second bite on the back end, which is the fun money. And she’d much rather see that go toward amazing causes, women in STEM, women’s leadership, entrepreneurs in healthcare, rather than taxes, because she can direct where it’s going in the economy.
She’s done some angel investing in women-led healthcare companies and women’s leadership charities. And once that second bite comes in, she has interesting plans. Her daughter is an entrepreneur, so investing in her is part of the picture too.
And for employees who’ve been with you a long time, there are ways to reward and incentivize them. They can make out in deals. They can be given equity and incentive units and grow with the new owner. Some of them, if the company gets sold two or three times, may end up making more money than you. So you have to look at it and say: I can take the risk off the table and take money off the table and put it back into society in different ways. Whereas before you may have affected the lives of 10 employees, now you affect the lives of thousands, everyone in your church or charity or community, because you’re putting the money back in and you have the time to do it.
Why Shuttering Is Not Failure
Some businesses get to the point where the owner doesn’t want to take it to the next level or it would take serious investment in AI or technology that they don’t want to pull from their retirement account. That’s a perfect reason to sell. If you can’t sell it, extract what you can out of it. And it’s fine to shutter. It’s fine to pull the shingle. That is not failure.
Look at how many years you paid for yourself, your family, and all the people on your team. For some, staying forever as an independent solo business is the dream. I know a few, Christine says. She tried to hire them. They said, I never want a boss. You’re great, but I never want a boss. Okay, I get it. You live on your terms, you make what you can make in the hours you want to put towards the business. That’s great.
The Buffet Nobody Tells You About
There is an entire buffet of choices inside your business and out. And to think your options are limited, well, whether you believe you can or you can’t, you’re right. Whatever it is that you think you want, let’s go do that thing. And if you don’t want to, don’t do it. We’ve forgotten that we have that option, to say no, to pivot, to change our minds, and to have that empowerment and freedom to just do it.
And try things. What’s the worst that can happen? As Rory McIlroy said about getting over problems in his game: what’s the worst thing that can happen if I hit this shot? I go find the ball and hit another one. Do that in business. Try stuff. As women we often think, oh, that’ll be so embarrassing if I fail. No one cares. Right? So just go try stuff. Don’t bankrupt yourself, but try things. If you have to fire parts of the team because a division didn’t work, you do it. You say, I’m sorry, this didn’t work out, and you try something else.
If anyone is sitting here listening and saying, I should try something different, I could build a business, I could go buy a company to add to my company, don’t be afraid to do that. It’s actually freeing in the end to try something like that. And the power you get even from a failure is knowledge and learning. The people who take the risk in this world are the ones that actually succeed.
Where To Find Christine
Christine is a paid contributor to Inc. Magazine writing on business exits and post-sale identity, and an exit advisor at christineslocumb.com. Everything is linked in the show notes:
Purchase Her Book: https://www.amazon.com/dp/1966168802
Instagram: https://www.instagram.com/cmslocumb/