If your client said he wanted to transition his business at some point, you would…
John Borrowman, CPC
Borrowman Baker LLC
You’ve probably looked at plenty of examples of control premiums for the businesses you’ve valued.
Did it ever occur to you that a control premium also applies to your career? Or that you can leverage it to your advantage?
From the seller’s point of view, a control premium exists when the seller is in control of the future, or direction, of the business. In the 4th Edition of “Valuing a Business”, Pratt/Reilly/Schweihs articulate a list of 20 common prerogatives of control. They comment that “the owner of a controlling interest in a business enterprise enjoys some very valuable rights that the owner of a noncontrolling ownership interest does not enjoy.”
So, how does this apply to you in your career?
The easiest example, of course, is to imagine yourself as unemployed. Any option that comes your way isn’t really that much of an option. For one thing, you’re not measuring it against something real – as in a job you actually have. You’re only measuring it against what might be, or what could be. For another, you’re in a weak negotiating position. Sure, you can attract opportunities. Are you in a position to fully consider them and how they will impact your career going forward, however?
Let’s be fair. Chances are you’re not unemployed. But, if you’re unhappy enough to be thinking about moving on, are you really that much better off? If you’ve already made the decision to leave, are you any different from the owner who has already decided to sell? Without the alternative to stay where you are, you risk making a bad career choice. You risk making a choice in order to avoid something, rather than to get something.
Your control premium is highest when you are happiest and most content. That’s when you should be having a conversation with a recruiter who specializes in valuation in order to get perspective on the options that you might face at any given point in time. You’ll never be in a better position to make smart and informed choices about your career.