Most M&A Professionals Misunderstand the Seller (#206) — Transcript
THE PICTURE OF WEALTH · EPISODE 206
A business sale can look financial from the outside and feel deeply personal to its owner. Dustin Serviss explores how perception, ambition and identity shape the decisions behind an exit.
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This transcript was generated from the episode audio and lightly edited for readability. It may contain transcription or speaker-attribution errors. Refer to the recording for exact wording.
Transcript
[00:00:03] Dustin Serviss: I've been thinking about obsession and perception, and how the things we become obsessed with can completely change what we believe is possible. Here's a strange example. Think about a kid playing hockey in Canada. The odds of the kid eventually building a meaningful NHL career are incredibly small. One well known study put the odds of a major hockey player eventually playing four hundred NHL games somewhere between one and four thousand. One in four thousand. And yet, look at the behavior around that possibility. Five o'clock mornings, hours in the car, tournaments, hotels, equipment, power skating, summer camps, parents restructuring weekends, kids shooting
[00:00:45] Dustin Serviss: thousands of pucks in the driveway. Nobody looks at all of that and says, this is ridiculous. Look at the stats. We understand something instinctively. If the kid loves it, you go. You practice. You find a coach. You get a little better. You move up. You see where it goes. And I think there is something really interesting about that because somehow, we have decided that this is incredibly unlikely outcome is still possible. And once we believe something is possible, our behavior changes. Now change the subject. Tell someone, I'm going to build a company worth twenty million. I'm gonna make two hundred fifty thousand a year. I'm gonna completely reinvent myself at fifty.
[00:01:26] Dustin Serviss: I'm gonna get into the best shape of my life. I'm gonna write a book. I'm gonna build a new career in an industry I know almost nothing about today. Suddenly, we're much more interested in the odds. Oh, that's difficult. Most people don't do that. You would need to know the right people. What happens if it doesn't work? Interesting. We're willing to change one in thousands odds on the ice. But sometimes, we won't seriously pursue a possibility with dramatically better odds because we can't yet see the pathway. And maybe that's the difference. We understand the hockey ladder. Learn to skate, play minor hockey, make rep, move up, maybe junior, maybe
[00:02:04] Dustin Serviss: college, maybe professional. We can see those steps. When we can't see the steps, we often mistake an unknown path for an impossible destination. That's perception. I've been reading Wayne Dyer again lately. And one of the ideas I've been wrestling with from the book The Shift is what happens when our ambitions start changing. Not disappearing. Changing. Earlier in life ambition can be incredibly useful. I can build this. I can make this much money. I can win. I can own that. I can prove I can do this. There is energy in that. I've lived a lot of my own life with that energy, and I don't think there's anything wrong with it. But eventually, another question begins appearing.
[00:02:45] Dustin Serviss: Maybe quietly at first. Why? Why this? Why am I pursuing this? What is actually this for? And perhaps even who am I becoming while I pursue it? That feels different to me than abandoning ambition. I actually think it could be more mature version of ambition, not less drive. A better target for the drive. And that's where this has started connecting for me with something else I've been talking about lately, selling a business. I've had a number of conversations around business owners, transactions, valuations, buyers, sellers. We spend enormous amounts of time talking about the financial side. What's the business worth? What's the multiple? Who's the buyer?
[00:03:27] Dustin Serviss: How's the deal structured? How much do I keep after tax? All important questions. But I'm increasingly convinced that there's another transaction happening at the exact same time, and it isn't on the closing statement. It's an identity transaction. Imagine building something for twenty five years. People call you because you're the owner. Employees need you. Customers know you. Your calendar has structure. Problems arrive every morning that you're unusually qualified to solve. You walk into the building and there are hundreds, maybe thousands of little pieces of evidence telling you, you matter here. And then somebody comes along and says, congratulations.
[00:04:04] Dustin Serviss: You've won. Here's a check. Now give us the keys. That might be a fantastic financial outcome and still emotionally very difficult. Those two things don't contradict each other. Research into founders has actually looked at this for years. Founders can develop deep psychological ownership and identity around the organizations they've created. So separating from a company isn't always equivalent to selling another financial asset. You're not only transferring shares. You may be separating from a version of yourself. Now that has changed the way I think about sellers. If somebody has a perfectly good offer in front of them and keeps hesitating,
[00:04:41] Dustin Serviss: maybe they're not being irrational. Maybe another part of them is asking, who am I when this is gone? Where do I go Monday morning? Who calls me? What am I useful for? What am I building? What is the scoreboard now? And those aren't soft questions. They're human questions. In fact, they may be some of the most important questions in the entire transaction. If you're sitting across the table from a founder who has spent thirty years building a company, I think there needs to be some compassion for that. The buyer sees asset. The lawyer sees an agreement. The accountant sees proceeds. The banker simply sees a transaction. But the founder might be watching part of their identity leave the room.
[00:05:20] Dustin Serviss: And maybe this is where the shift becomes particularly interesting. Because perhaps selling isn't only an ending. Maybe it's an invitation. An invitation to decide what deserves your attention next. The founder has already proven something extraordinary. They know how to obsess. They know how to solve problems. They know how to tolerate uncertainty. They know how to wake up thinking about something and still be thinking about it twelve hours later. Those abilities didn't get sold with the company. They're still there. The question becomes, where do you appoint them now? That's a very different question than what am I going to do to stay busy?
[00:05:58] Dustin Serviss: I think there are periods in life where we're supposed to create, periods where we're supposed to achieve, periods where we're supposed to fight like hell for something. And perhaps there are also periods where the universe gives us enough space to ask whether we're still fighting for the right thing. That doesn't mean sitting on a mountain and abandoning ambition. At least it doesn't mean that to me. It might mean becoming more intentional about the next obsession. Maybe the next chapter is another company. Maybe it's investing. Maybe it's teaching. Maybe it's your health. Maybe it's your family. Maybe it's seeing parts of the world you've always said, I'll see that someday.
[00:06:34] Dustin Serviss: Maybe it's solving a completely different problem. Or maybe for a while, you don't know. And I think that's okay too because there's a danger in finishing one chapter and immediately grabbing for another project simply because silence feels uncomfortable. You can recreate the exact same life you just sold. Different company, same identity, same pattern, same obsession, which brings me back to the hockey rink. One of the most powerful things about human beings is that we can become intensely focused. Once we decide something matters, our perception changes. We see the coach. We see the opportunity. We see the weaknesses. We notice information we ignored six months earlier.
[00:07:14] Dustin Serviss: Our world appears to reorganize around the thing we're pursuing. Maybe the world hasn't changed at all. Maybe our attention has. And that means we should probably be careful about what we choose to obsess over because obsession isn't only helping us achieve something. It's also shaping what we see. And eventually, it's shaping who we become. So maybe the question isn't, what are my odds? And maybe it isn't even, what can I accomplish next? Maybe the better question for this stage in life is, what deserves this much of me? My attention, my ambition, my time, my imagination, my remaining years. Because we've already proven we're capable of becoming obsessed.
[00:07:52] Dustin Serviss: The hockey rink proves it. Entrepreneurs prove it. Anyone who has ever built something difficult proves it. The next shift might simply be becoming intentional about where we point that energy. Not less ambition, not less creation, not less desire, just a little more awareness about why we're doing it, and perhaps enough space to notice where the universe is trying to pull us next. That's something I'm thinking about. Maybe it's something worth thinking about for yourself too.