5 Reasons for Deciding to Sell a Business
By Rylie Holt
Deciding to sell a company that you have spent years of effort in building up is never easy. Nonetheless, there can be a whole range of factors that typically lead business owners to look to cash in. The nature of these factors will dictate the speed with which a business owner needs to conclude a transaction as well as the desirable period of time designated to complete the transition.
Familiarizing oneself with the business owner’s motives for selling is crucial for potential buyers and business brokers alike. What follows are the most common reasons among business owners for deciding to sell and how they can affect the sale process in different ways.
Retirement is one of the most common reasons for selling an otherwise profitable business. In many cases, the owner’s family members are unwilling or do not possess the requisite skills to assume ownership of the business.
Business owners who are entering retirement vary in what they want the transition to look like. While some owners like to play an active role in showing the new owner the ropes, others prefer to make as swift an exit as possible. This is where a reputable business broker comes in useful. They will use their experience to find a buyer who is willing to respect the wishes of the outgoing owner.
Running a business can sap the energy of even the most enthusiastic owner. When an owner gets burned-out due to loss of interest or fatigue, this is bad news for the long-term prospects of the business. It is impossible to keep up with competitors if your heart is not in it anymore. If this is the case, the wisest decision is to sell the business to a new owner who will invest the time and energy that is needed to make it successful.
PROFITS HAVE PEAKED
It is natural that any business will pass through different cycles of peaks and troughs over a period of years or months. A common motivation for selling a business is when an owner calculates that the company has reached a peak that will help them to maximize sale price. At times of high profits and a healthy financial outlook, it is much easier to strike a deal that is closer to the price that you feel your business is worth.
A certain amount of conflict and difference of opinion in a company with a joint ownership structure is only natural. However, when differences of opinion turn out to be irreconcilable, the working relationship can break down, making carrying on together impossible.
Although the simplest solution to this problem is for one partner to buy out the other, fixing the problem is seldom this simple. In many cases, stakeholders are unwilling to cede their share of the business through a sale. When this happens, it is time to bring in the external help of a qualified business broker who should be able to help owners overcome the impasse.
As every businessperson will attest to, running a business can be extremely stressful. Although you may be able to deal with the stress under normal circumstances, you may find that it becomes impossible to continue if you suddenly have a health scare. When this happens, many people decide to sell their company and begin a new low-stress lifestyle. In such cases, hiring the services of an experienced business broker can be the best solution to help make sure the transaction is quick and smooth as possible.
SELLING A BUSINESS: COMPLEX MOTIVATIONS
There are many reasons for selling a business. As a buyer, it is essential to examine and empathize with a business owner’s motivations for selling. If you do not have much experience in closing business acquisition deals, your best bet is to hire a qualified business broker to help negotiate the best deal for you.