Shoot the Moon with Revenue Rocket

You Sold Your Business… Now What? Thriving Post-Close in a Sell-In World

Episode Summary

In this “selling-in” installment of Shoot the Moon, Mike Harvath, Matt Lockhart, and Ryan Barnett tackle the question every founder eventually faces: “You sold your business—now what?” They break down the two common exit paths—sell-in (recap with a minority roll-over) versus sell-out (full exit)—and explain why the post-close experience and upside look very different in each case. Drawing on personal exits, recent client deals, and decades of advisory work, the trio explores how to: craft a realistic personal plan before the wire hits so idle time doesn’t turn into regret; assess cultural fit just as rigorously as financials to avoid post-close “dissonance”; treat earn-outs and equity rolls as risk-managed upside, not “funny money,” and stay engaged so they actually pay out; prepare emotionally for shifting relationships once you’re no longer “the boss” and channel your entrepreneurial energy into a new chapter. Throughout the conversation they emphasize that a clear roadmap—and the right advisor bench—turns a life-changing liquidity event into a springboard for the coveted “second bite at the apple.”

Episode Notes

Actionable Nuggets

Draft two roadmaps: a 90-day integration game-plan and a personal “what’s next” list.

Pressure-test cultural alignment early—values mismatches cost more than deal points.

Treat the earn-out like your new bonus plan: stay plugged in or negotiate influence levers.

Celebrate intentionally: marking the exit helps you mentally close one chapter and open another.

Use these insights to ensure your own exit isn’t just a payout, but the prologue to an even bigger success story.

Episode Transcription

00:00 | Mike
Hello, and welcome to this week’s Shoot the Moon podcast, broadcasting live and direct from Revenue Rocket world headquarters in Bloomington, Minnesota. For those of you who tune in regularly, Revenue Rocket is the premier M&A and growth-strategy advisor to IT services companies. With me today are my partners, Matt Lockhart and Ryan Barnett. Welcome, guys.

00:24 | Matt
Thank you, Mike. Good to be here—grinding away in the dog days of summer, right? Ryan, what’s going on today?

00:44 | Ryan
If you’re like a lot of people, the Fourth can be a time for friends and family. When you get people together, you’re hopefully planning for the future—what it looks like to keep running a company or to run your life after a company. Today we want to talk about that: What does life look like after the sale? What does no one tell you? What should you expect as a business owner once the check’s signed, the deal’s closed, and everyone takes a breath? We work with a lot of founders who have gone through this. Mike, you’ve talked about it a lot—why don’t you get us started? You’ve sold your business—now what?

01:34 | Mike
As with many things, it’s nuanced. The answer depends on whether you’ve joined with a capital partner in what we call a “sell-in,” where you still own equity in the business and move forward together to build a much bigger business for that “second bite at the apple.” You’ll be part of the new enterprise—whether as a platform or a tuck-in—and you’ll play a critical role for a period of years. That post-close plan is fairly defined: you vet each other pre-close, align on growth plans, then execute. In essence, you’ve recapitalized your business for further growth and profit, generally selling a majority of your equity and keeping a minority.

02:44 | Matt
Position—

02:46 | Mike
—working together with your capital partner to scale, grow, and build value for another exit down the road. The other path is what we’ll call “selling out.” That’s about transitioning out and away from the business at a logical point. That one can be tougher. Often, someone takes a call—maybe from a firm like Revenue Rocket about an interested acquirer—and you move down a path. It looks like an interesting opportunity, but the seller also has to think hard about what’s next. If you don’t plan ahead, you can be miserable. From my own experience—having done this three times—and advising hundreds of owners over 25 years, planning for the future is critical. Without a solid plan, “any road will get you there,” and that’s not good mentally or for your contentment. Everybody thinks a big check solves everything. Money can’t buy happiness—this is a good example of that.

04:36 | Ryan
Great start, Mike. Matt, you’ve worked with a lot of founders who have sold—some selling in. When someone sells in, the CEO goes from being “the person” to taking a different role. What happens in that transition, and how should someone prepare for a new role in a new company?

05:10 | Matt
First, recognize you aren’t the “man” anymore—i.e., you don’t have final veto. Any good leader empowers their team, but as a founder there are always decisions that ultimately land with you. In a sell-in, whether with a capital partner or a strategic, you’ll need to work decisions through others. The right partner will recognize your skills—you built a great business and led a great team—but sometimes other people will think differently. You must be comfortable having a boss again. Do the soul-searching up front. A contentious decision will come—how will you react if it doesn’t go your way?

If you can say, “I’m taking some chips off the table; our incentives are aligned; let’s go,” then make sure you’ve found the right partner you can genuinely work with—aligned culturally and strategically, and personally. We used to ask, “Could I go have a beer with that person?” That still matters after you get over the hump of saying, “Yep, I’m cool having a boss.”

07:58 | Ryan
It’s a new chapter, and being part of a new team is always different. Change is hard. Mike, have you seen cases where the integration didn’t match what was promised? Were there red flags during the deal process that hinted at post-close issues?

08:27 | Mike
For sure. When we see it, we try to flag it. It usually stems from cultural differences.

08:42 | Matt
When—

08:44 | Mike
—when I say cultural differences, I don’t mean racial differences. I mean how people think about culture: customer-care philosophy, employee-care philosophy, how they manage and run the business, how they market, how they approach the human experience of interactions. The tone in an entrepreneurial business is set by leadership—often the owner(s). That tone attracts like-minded employees, staff, and partners. When there’s dissonance, a lot of chaff gets introduced into the relationship—different views on how to treat and manage people, how to work together, or how to manage customer relationships and delivery.

You’ve heard us say deals must hold together strategically, culturally, and financially. Culture is often overlooked. That’s why we use a culture-scoring rubric in all our deals and have an industrial psychologist on staff to help vet cultural fit and interaction. Financial and legal diligence get a lot of attention—and you wouldn’t contemplate a transaction without strategic fit. Where bumps arise post-transaction—the real heartburn—is cultural mismatch. Taking the time to get culture right will make you much happier post-close, especially if you’ll be on the leadership team of the new entity.

11:42 | Ryan
Thanks for getting us going there, Mike. You mentioned that if you’re exiting—no longer part of the ongoing entity—you need a plan for what’s next in life. Matt (and Mike, feel free to jump in), how do you help clients think about their next chapter once the wire transfers? What advice leads to the happiest post-exit? Matt, start us off?

12:49 | Matt
I’ve been through it. Even though we coach people that selling a business is a six- to twelve-month process (depending on readiness and other factors), that time goes quickly. I knew I wasn’t selling in, and I wasn’t retiring. So I explored: What do I really enjoy? Who do I enjoy working with? Do I want a different industry or the same one? Put time toward it—hard to do while selling your company.

Some practicals: get away before the wire hits. Getting overseas can help—out of your environment—with time to think. Involve peer groups, friends, and family; collaborate. And plan something fun to celebrate after the deal closes—a distinct reward you’ve wanted. Marking the closure of the old chapter helps you start the new one with the right mindset. Your plan doesn’t have to cover “forever.” You might say, “I’ll take X months to figure it out,” with steps you’ll take during that period. Everyone’s path is different—so plan to build the plan.

16:37 | Ryan
Great advice. Remember, your employees are going through change, too. I’ve been an employee through a number of transactions—it can be exciting and also frightening. Sometimes, in an asset sale, you’re handed a termination letter and a hiring letter the same day. Founders should pre-plan how that will work to retain and support their best staff. Set goals, plan ahead, and—yes—set that reward for when you reach the apex.

Switching gears: this happens in sell-ins (and sometimes sell-outs) alike. How should a founder think about an earn-out—emotionally and tactically—after close? Most deals in our space have cash at close plus, say, ~30% in an earn-out. If you have a six-month consulting agreement and a two-year earn-out tail, how do you keep the business growing as a going concern and hit the earn-out?

18:29 | Mike
Owners often forget that today they carry 100% of the risk (and control)—their income is essentially an “earn-out” already. Great year, you do well; bad year, you don’t. In a transaction—whether a recap or a full sale—with an earn-out (sometimes we say “gain-share”), you’re de-risking by taking money up front. The earn-out gives the buyer comfort that you’ll support the business to achieve its forecast. Preferably you’ll be there; if not, and you’re only around for, say, six months, make sure the team, plan, and funding are in place so the earn-out can be achieved.

Interestingly, when structured properly, the vast majority of earn-outs get paid at or above target. It’s not risk-free, but you can mitigate risk by ensuring the team can pull the right levers, and by staying influential—employee, contractor, board member, advisor, or simply available for a phone call when challenges pop up. You have a clear financial incentive to help.

21:18 | Ryan
Exactly—stay engaged and set terms everyone can agree on, with targets that aren’t easily gamed. Not all deals are successful; sometimes founders even buy businesses back. We work hard to structure arrangements that are fair and achievable.

Last question for both of you: What’s one thing no one tells you about life after selling your business? Matt, you first—Mike, you can close us out.

22:12 | Matt
One thing that struck me: you work closely with customers, partners, and employees. Some relationships become great friendships and those continue—but many relationships change, evolve, or even fade once you’re no longer the boss or a partner. That’s okay—those were business relationships that served a purpose. It’s helpful to know that dynamic ahead of time.

23:48 | Mike
I’d echo that. Things change—relationships, time, priorities. Two recent conversations: First, with a young owner not contemplating an exit, but realizing he might recap to build a meaningful family office—so he can invest and pursue philanthropy. A recap—taking some chips off the table now and aiming for a second bite later—can advance that purpose in his lifetime. That’s a purposeful plan.

Second, a guy who sold two IT services businesses and recharged for a few years. During the pandemic, with little else to do, he started another business with former partners. It’s now a successful, growing concern—proof that a transaction can be a catalyst. Personally, I’ve had that itch three times before starting Revenue Rocket. Another client had a great exit, then built a new company acquiring other IT services firms—making that his family-office investment paradigm.

More often than not, an exit where you leave becomes a rebirth—scratching the entrepreneurial itch. Some people, even at 35 or 40, retire to focus on family and hobbies. Will some of them jump back in later? I suspect so. You don’t have to say, “I’m selling and now I must play golf every day.” Be open to new opportunities—you might find a new passion. Plan thoughtfully for post-deal life, but leave room to follow interesting roads when they appear.

29:45 | Ryan
Thanks, Mike and Matt—great insight. Closing a deal and getting that check gives you the chance to be part of something bigger or figure out your next steps. The most important thing is to have a plan—not just for selling the company, but for what comes next. Mike, any closing thoughts before we wrap?

30:32 | Mike
My biggest advice: as hard as it is, look into the crystal ball and contemplate the future—especially if you’re selling out. Entrepreneurs move fast; time is your most valuable commodity. When you suddenly have more of it, know how you’ll deploy it—volunteer work, philanthropy, starting a new company, board work, or simply enjoying family and friends. Get clarity on where that might go; narrow the field of options.

31:47 | Matt
Will—

31:48 | Mike
—serve you really well. And to some extent, the same applies if you’re selling in. Understand your secret sauce—your superpower. How will you play a role in a fast-growing business that best leverages it? Do that, and you’ll be happy and contributing at a high level—and you’ll be well-positioned for a successful second bite at the apple when the time comes. With that, we’ll tie a ribbon on this week’s Shoot the Moon podcast. Thanks for tuning in. Join us next week as we unpack more M&A and growth-strategy topics for IT services companies. Thanks again—and make it a great week.