The 5 stages of change applied to the sale of a company

Deciding to sell your business, putting it up for sale, finding the right buyer….Any change, whether professional or personal, is a source of anxiety and discomfort. Leaving something for which we have a strong attachment is not easy. This is also the case for managers who are selling their company.

Change: a natural process in 5 steps

Change is uncomfortable because we lose our bearings, our habits. We will have to adapt to the unknown, to the new. Accepting change takes time, but in the end we accept it. This is what psychiatrist Elisabeth Kluber-Ross (1926-2004) tells us. This

was a pioneer in the palliative care approach for people at the end of life. She is known for her theorization of the different emotional stages (Kübler-Ross model) experienced by a person who learns of their impending death. This theory can be applied to any form of catastrophic loss.

The 5 stages of change that allow to accept a new situation are schematized on the curve below. Each person navigates from one to the other at his own pace.

It applies to all situations of change including the transfer of businesses.

STEP 1 – SHOCK AND DENIAL

When an upheaval occurs and we are not prepared for it, the first reactions are shock, stupefaction, denial and refusal of reality. The shock will be all the more brutal when a business transfer is forced or unexpected. The transferor must therefore prepare for the transfer in order to mitigate this suffering. However, it should be noted that, even if the transferor has been preparing for the transfer for several months, or even years, he must still carry out real mourning work.

Examples of possible reactions from the seller during this phase: “It’s as if I’ve had a limb amputated“, “It’s not possible for me to give up my business“, “My business can’t function without me“, “The employees and customers still need me“.

STEP 2 – ANGER AND FEAR

This phase begins the moment the transferor starts to become aware that the transmission process has really started. The most frequent affective expressions of this phase are: desire and search for what is lost, escape from the present situation, avoidance, hyperactivity, nostalgia, guilt́, remorse, anger, revolt…

Among the possible reactions of the transferor, we can cite several examples: “I could have organized things differently“, “I regret that none of my children wanted to take over“, “Why didn’t I know how to interest one of my children“, “I would like to have this company and be 30 years old“, “If I could be in the place of the new boss“.

STEP 3 – SADNESS AND FEAR

This marks the recognition of the definitive nature of the loss and therefore the gradual return to external reality and its acceptance. The following affects are the expression and consequence of the disinvestment of the lost link: destructuring, disorder, loss of reference points, depression, withdrawal, silent sadness, feeling of uselessness, lowered self-esteem, devaluation, physiological problems (insomnia, headaches…).

Here are some examples of possible reactions from the seller: “I’m at the end of my rope“, “I don’t know where my marks are anymore“, “I’m a bit lost“, “I went to see the doctor so I wouldn’t collapse“, “I don’t sleep anymore“, “I didn’t want to show my loved ones that I was suffering“, “It’s like I’m worthless, I’m a dead weight“.

STEP 4 – THE QUEST FOR MEANING/ TESTING/ ACCEPTANCE

This is the end of the mourning process. The seller accepts to detach himself from his company and to re-socialize in other social, economic, cultural, associative or leisure activities. This reconstruction consecrates the irreversible character of the loss.

Examples of possible reactions from the seller: “From now on, it’s over, I have to move on to something else“, “For me, it’s a new life, a rebirth“, “I stopped all activity, I am vice-president of the Federation of the BTP“, “At the request of the CCI, since my retirement, I help young creators to set up their projects“.

STEP 5 – SERENITY AND NEW STRENGTH

At this stage, people have understood and integrated the change. They project themselves more easily into the future. Knowing this theory allows one to relativize and overcome the emotional states one goes through when committing oneself to the transmission of one’s business. It shows that the uncomfortable situation will find a positive outcome with time by being accepted.

Ready to pass the torch with peace of mind?

At Actoria, we believe that the key to success for the transfer to take place in the best conditions is not to neglect the preparation upstream. It allows us to address all the professional but also personal aspects related to the transfer.

The key to overcoming the stages of this life change and avoiding unpleasant moments remains good preparation and support at every stage so that nothing is left to chance and you remain serene.

By Fabienne Gallet, Mergers & Acquisitions Consultant Actoria