It was exciting for John Oldman to start his own business while in his 20s; selling it nearly seven years later proved a bit more complicated.
"Over all, I would characterize selling it as a positive experience, but my calculations were all off as to how I thought it would go," says Mr. Oldman, 36. Now a Toronto resident, he founded and ran a Whitby, Ont., water treatment company called AquaLibrium Water Technologies Ltd. from 2007 to 2014.
"When I started it, I was finishing my MBA and working for someone else. I wanted to do something entrepreneurial. I went to my former boss and we reached a deal where he took 10-per-cent equity in the new company and also became a supplier," explains Mr. Oldman.
AquaLibrium grew to a company with several million dollars in annual revenue and some 30 employees. Toward the end of six years, Mr. Oldman decided it was time for a change.
"I got tired of having a minority partner. I approached my partner about taking sole ownership, but it became obvious he would never sell and actually wanted to buy me out, so I sold my 90 per cent of the company to him," he says.
That's where Mr. Oldman's business transition took a few twists and turns.
The first complications arose when he and his soon-to-be ex-partner sat down to hammer out a valuation for AquaLibrium.
Often, when a private business is sold, the seller hires a broker, who comes up with a value and represents the vendor in the negotiations. "I didn't have a broker – most of the negotiating was between the buyer and me," Mr. Oldman says.
In the negotiations, the chief executive officer for the purchaser brought in people to valuate Mr. Oldman's company and he didn't agree with their assessment. "They were disruptive. Our talks broke down a number of times," he says.
Eric Gilboord, who is a business transition broker and advisor, laughs sympathetically when he hears Mr. Oldman's observation.
"I tell businesses that I work with that it's really important for them to find the right buyer," says Mr. Gilboord, who has his own marketing services company called Warren Business Development Center Inc. and has released a new book on transitions called Moving Forward: Get the Triple Effect.
In Mr. Oldman's case, once the two partners were able to agree on a price, the sale did eventually proceed. The company is now run by a larger water treatment company, which was the original 10-per-cent partner.
Yet while the new firm turned out to have the expertise and resources to bring the Whitby company under its wing with success, the transition still proved difficult for Mr. Oldman at times.
He agreed to a "workout" – he would stay for three years after the sale to help smooth the transition for AquaLibrium's employees and customers. "I felt that I owed them a legacy – at least I thought so at the time," he says.
One of the problems was that while he agreed to stay, some of AquaLibrium's employees decided to leave. Mr. Oldman had to remain loyal under the terms of his three-year agreement.
He also found it difficult to move from a position of leadership to simply being a member of the new company's management team, with less authority.
"I had a hard time adjusting to that. The new parent company had a lot of changes they wanted to make, and it was tough not having my voice heard all the time. It was especially hard in board meetings where I was no longer the leader," Mr. Oldman says.
"My advice is that if you have a transition, don't make it three years."
Mr. Gilboord adds: "That's the toughest thing, when you're down the hall and you feel they don't want to listen to you. Some of my clients describe the experience of their first year working for new owners as Year One of a three-year sentence."
It isn't always that way, though, he adds: "Some companies go out of their way to make it enjoyable for the owner to stay on."
Perhaps one of the most remarkable, yet little known, business transition stories is that of Colonel Harland Sanders, the founder and creator of Kentucky Fried Chicken, now called KFC.
As KFC grew in the 1960s, Col. Sanders sold the company, though he retained the Canadian operations – he even bought a house in Mississauga, Ont. Yet he remained as spokesman forever, even beyond his death in 1980 by continuing as a cartoon version of himself that the company created.
Mr. Oldman had no aspirations of staying on as a cartoon for AquaLibrium.
After the second year of his three-year workout, he renegotiated to continue to the end of his term on contract as an advisor, and then invested in a new business, student housing.