Exiting a business is something many business owners aspire to do. And why wouldn’t they? The act of selling and sailing off into the sunset is glamorized in the media. Life-changing exit sums are reported alongside images of clinking champagne glasses and happily shaking hands. But when the paperwork is complete and the company is under new management, what remains for the post-exit entrepreneur?
Entrepreneurship specialists from the Yale School of Management, including post-exit entrepreneur A.J. Wasserstein, put forward that the aftermath of an exit can be a confusing time for the post-exit entrepreneur, or PExE for short. Wasserstein was previously founder and CEO of ArchivesOne, the third largest records management company in the US, which he sold to Iron Mountain after 17 years of operation. He went on to become the president of Onesource Water before selling it to Water Logic in 2016. Now Wasserstein researches, writes and teaches at the Yale School of Management, where in 2022 he won the Faculty Teaching Excellence Award.
After interviewing PExEs, Wasserstein and his colleagues published, What’s Next: The Entrepreneur’s Epilogue and the Paradox of Success, and categorised PExEs into five common post-exit archetypes: the do-it againer, the discoverer, the recreationalist, the investor and the philanthropist.
Many PExEs will fall into a few different categories. Which one might you be?
The do-it againer
This type of PExE “liked what they were doing as an entrepreneur and were clearly good at it. The exit was an affirming event, so rather than reinventing themselves, they believe they should do it again.” The do-it-againer wants to get back in the arena after they depart. They “remember the thrills of building a business” and they seek to recreate those highs.
After exiting their business, this PExE is fuelled by “a healthy dose of hunger and confidence.” Wasserstein warns that, although many entrepreneurs succeed in their second go, “it’s important they ask themselves what they are trying to prove” as well as remembering that “the first five years are brutal, and they are older now.” There is no right or wrong answer, “but it’s imperative to consider the trade-offs.” After an exit, a PExE can create whatever life they choose, so reversion might not be the only choice.
Someone who is “unsure of where they would like to be and what they would like to do in the long term,” might be a discoverer PExE. They might feel like they are in a state of limbo whilst considering their options. Within their paper, Wasserstein and colleagues outline a series of phases a PExE should go through upon exit, including a vital “pause” phase, during which “it’s important to take some time off after the exit.” What follows, however, is “setting clear objectives and timelines.”
The discoverer who doesn’t set clear objectives and timelines might feel like, “they are stagnating and constantly wandering.” Wasserstein advised that they, “consider a broad array of options and avenues through which they can add value and make a contribution that will bring them joy and fulfilment.” The opportunities for your next step are endless, which is a really good problem to have but, at some point, in order to find fulfilment and meaning, it helps to move beyond trials and into a phase of commitment.
This type of PExE prizes consumption. They “make expensive purchases, such as homes and cars, often soon after the exit.” They cash the cheque and head to the shops. They want the possessions to prove their sale. Not only that, but they are booking the trips and preparing to depart, spending “significant amounts of time and money on travel and leisure activities.”
Many PExEs fulfilled their material urges whilst the profitable business was still theirs, negating the need to consume upon an exit’s completion. If a PExE felt their business tied them down, however, it makes sense that the exit would swing them in the opposite direction. If someone wasn’t used to having a lot of cash in one go, it makes sense they want to spend when the windfall arrives. A PExE finding themselves in this position should stay self-aware. For every purchase or booking, consider what they are really trying to achieve. There’s nothing wrong with extravagance as long as the reasons behind it are sound and the math makes sense and is sustainable. Recreationalists need to be wary of chasing endless sugar highs through more and new forms of consumption.
In contrast to the do-it-againer, the investor, “enjoys playing in the entrepreneurial ecosystem but knows that they don’t want to be a CEO all over again.” They want to keep their toes in the game without getting their hands dirty. Their exit earned them the right to stay, “the other side of the proverbial fence.” The investor will “provide the capital injection” and then simply, “advise other entrepreneurs or business owners on what to do.”
Whilst this sounds brilliant, Wasserstein knows, “an advisory role may be challenging for someone not used to taking a back seat.” However, for someone who “wants to accumulate more wealth and recreate parts of their pre-exit life,” this archetype makes total sense. How satisfying the PExE finds the role of investor will differ between individuals, as “being an investor is a very different role from being the CEO and entrepreneur.”
The final of the five is the philanthropist. This type of PExE focuses on, “creating social impact with their time, talent and treasure.” They give time and money and they give back. “Devoting themselves to philanthropic endeavors may make for a fulfilling and influential post-exit lifestyle.” This person has already created all the wealth they need and made a huge impact in business, now they dedicate their time to creating more impact in another field, without needing to earn financially.
Their goal is, “impact, and doing good in some manner.” This goal may have been determined before the exit, or it may have surfaced after a period of reflection, and a realization of how their talents can make the most difference for others. Often, a PExE turned philanthropist will focus their efforts on a cause that has been known to them for a while. The solutions might have been bubbling below the surface waiting for an abundance of time and money to arrive on the scene. The plan now has the resources and the philanthropist emerges.
If you have sold your business, you might find that you fit into one or more of the categories. If you aspire to sell your business, visualise the future and think about which archetype you’ll likely match. Selling a business can feel lonely and confusing but proven models and a community of peers can turn the fuzziness into optimism for the future and a readiness to create it.