When it comes to the companies in which they have built with blood, sweat, and tears from a concept to a successful business, entrepreneurs are very much like super-protective parents. The act of creating an entity that delivers a marketable product or service and provides for the livelihoods of other families can very much be compared to giving birth, and it is often difficult for the entrepreneur to walk away, even after selling the business for a huge payday. 

Bite the Bullet or Clear Out?

A 45-year old Reddit poster recently sold his company to a large private equity firm. He is still working for the company in a senior capacity, but abhors the newly installed CEO.  He is conflicted as to whether or not to stay out of loyalty to his former team employees who have stayed on, or whether to cut the cord once and for all. His other circumstances are as follows:

• He and his wife currently have $9 million – $1.5 million home equity and $7.5 million in ETFs.  They have two children and live near a popular college. 
• His 41-year old wife works for one of the Magnificent 7 companies and earns $500,000 per year, including bonuses and stock options.. 
• The family’s annual expenses are $300,000 per year. 
• His current salary is $250,000 per year. He is entitled to a $400,000 bonus if he remains at the job for a minimum of 9 more months. 
• In addition to loyalty to his team, he is conflicted about leaving due to disagreements with the CEO’s decisions and his own concerns over what to do next if he leaves.

Separation Anxiety?

From an objective perspective, the poster shows indications of separation anxiety. Practically speaking, while the relationships with members of his team may have gone beyond that of an employer and employee to genuine friendships, his sale of the company is now history, and they all need to adjust to whatever the new CEO’s policies may be. The members of the team still have families to feed; only the poster has the luxury of being able to walk away.

The poster hates the new CEO, whom he describes as “rude and robotic”.  Clearly, there is a different management style. Certainly, the poster has the ear of his team members who have probably voiced many of their complaints and criticisms to him in private. Decision wise, he may disagree with the new CEO’s direction and directives, but his sale of the company (which does not disclose whether any minority equity percentage in the company was retained) has effectively removed his decision-making power. Difficult as this new role may be for him, the poster must look at himself now as an employee, albeit a senior executive or consultant one. As such, he needs to create a bit of distance between himself and the company in order to view company challenges and decision options objectively. 

Practical Steps

From my POV, the poster is certainly sufficiently set financially to embark on a new career. His wife’s compensation alone is enough to cover the family’s expenditures, but at age 45, he still has a couple of decades left of productivity and experience to be utilized.  If he decides to walk away, he leaves $400,000 on the table, and leaves his team with the current situation, which may deteriorate further if employee morale mirrors his own dissatisfaction. 

However, should he decide to stay for at least the remaining 9 months, not only can he score the extra payout, but he might have a chance at improving the office culture to the point where he may decide to stay on with his $250,000 salary. For that to happen, I suggest the following steps:

• The poster’s dilemma is not unlike in professional sports, where a former head coach has now become an assistant coach on another team. 
• Putting himself in the new CEO’s shoes, he should try to view the CEO as one who has been tasked by the PE company to outperform last year’s earnings and make the company an even greater success.
• Given his intimate knowledge of the company’s products, services, operations, and workforce, the poster should attempt to befriend the CEO from the angle of acknowledging that a PE-backed CEO has different targets and benchmarks to meet than what the poster may have formerly had when running the company. He can offer his services of being a conduit towards better communication with each department, and in a position to offer advice as to the path of least resistance to accomplish each goal with the company’s resources and infrastructure. 
• If the new CEO is intelligent enough to recruit an insider ally with sufficient clout and gravitas in the company to get things done, this can be the start of at least a more cordial working relationship.
• If the new CEO rebuffs the overtures, then the poster can either cruise through the remaining 9 months and start preparing for his next chapter, or still walk away if he gets to the point where animosity becomes intolerable.

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