When making investment decisions as a business owner, it’s important not to let emotions cloud your judgment. Many entrepreneurs view their companies as their ‘babies’ and become too attached to part with them. However, there comes a point where it makes sense to exit, regardless of age. The key is objectively assessing whether selling or holding will lead to the optimal outcome based on your personal financial situation, future plans, and risk tolerance rather than making knee-jerk decisions based on emotion. Often, selling allows business owners to free up capital for new ventures or lock in handsome returns from years of effort. With proper planning around an acquisition, founders can end up with increased opportunities and an improved quality of life after handing over the reins.
Founders shouldn’t view companies as sons but rather investable assets to be objectively evaluated
As Boquan He of Robust shares, many entrepreneurs make the mistake of becoming too emotionally attached to the companies they founded and refuse to part with them no matter the price, as if they were sons. However, businesses should be viewed from an investor’s perspective as assets that can be sold given the right valuation. There is always an acceptable number. Founders shouldn’t handcuff themselves but rather remain open to opportunities, as over 90% would likely sell their stakes at a fair price. The decision to hold or sell should be based on personal financial situations and risk profiles rather than emotion.
Selling allows owners to realize returns, free up capital for new ventures, and improve quality of life
In Boquan He’s case, selling Robust to Danone allowed the company to improve systematically, which in turn led to employees increasing their competencies and value by transitioning from a local enterprise to a Fortune 500 firm. Personally, He was able to achieve greater peace of mind, happiness, and freedom to pursue other interests like angel investing in startups. Many founders experience fatigue and lose passion over time while scaling companies, making an exit sensible for both personal and professional reasons when the numbers make sense.
Investment decisions depend on individual circumstance more than age or tenure
The examples discussed demonstrate that investment decisions around buying, holding or selling companies depend more on personal financial situations, career stage, and risk appetite rather than fixed thresholds like age or years spent building the business. While experience helps inform perspective, being grounded in individual realities and having an investing mindset is most important.
When deciding whether to hold or sell an invested business as the owner, it’s critical to assess the situation objectively rather than making emotional decisions based on attachment. There are often compelling financial and personal reasons to exit a venture at the right valuation, regardless of age or tenure. The key is determining what will optimize outcomes and quality of life based on individual circumstances.