She thought her divorce would free her up to run the company the way she wanted. Marianna (not her real name) and her former husband had been business partners for eight years. They had a great working relationship when the company was launched, but the company’s success seemed to create a wall between them. If she said zig, he wanted to zag.
I met Marianna through a Nashville-based service organization. Ten minutes into our conversation it was clear she was ready to sell the boutique housewares company that bore her name. “I put everything into this company,” she told me, “my heart, my soul, my money, even my marriage. Now that he’s gone, I feel like the handcuffs are off, but I just don’t have much left to give, is this a good time to sell? she asked.
“It’s hard to sell a company when your name is on the door,” I told Marianna, “I hope you have a strong organization that can continue to grow the company once you’re gone.” “My team is the best” she quickly responded, “but they’d be traumatized if they heard I was trying to sell. We have to keep this very quiet.”
After I reviewed her financials, I told Marianna her company could be sold for $17 to $20 million. When I presented a list of potential strategic buyers, I was surprised she seemed to be on a first name basis with most of them. “We’ve been hanging out at the same trade shows for years,” she said, “but none of them would buy my company unless I stayed with it, and I just don’t want to do that. Truthfully, I’m just over it.”
Unfortunately, Marianna is victim of having built her own prison, a nice prison mind you, but one from which she cannot easily escape. The company she built that bears her name also reflects her personality and her design sensibilities. Every product that goes out the door has her imprimatur in some form or fashion. She is known by her employees, her customers, and her competitors as the design influence that drives the company.
Much larger companies are indeed interested in Marianna’s company, even for a price greater than I first estimated. But every proposal we’ve seen is based on Marianna not only staying with the company, but increasing her role and visibility.
As she built her company, Marianna has done most things the right way. When she had a task she could not do herself, she wasn’t afraid to hire great talent, pay them well, and give them authority to do their job. This was, in part, the reason her team was so loyal to her. But when it came to product design, Marianna was, and still is, the center of the universe. By not making herself replaceable, Marianna has created her own prison. It is my belief, and I have told her this, that if she sells to a larger, more diversified company, she’s likely to find her new role invigorating and challenging. It’s her best hope for escaping the prison she has created for herself. Her only other option is to put the sale of her company on hold, then invest a few years to find and train that person(s) who can assume the mantle of creative and energetic leadership that defines the company now.
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