June 2, 2020
8 Reasons For Deciding to Sell a Business
By Achim Neumann
Taking the decision to sell a profit-making company is never easy. There are typically many factors that lead a business owner to draw a line under his/her time in charge of the company. The nature of these factors will influence how quickly a business owner will need to sell and the length of the transition period that is desirable for the transaction.
Understanding a seller’s motives(s) for selling their business is imperative for potential buyers and Business Brokers. Read on for the most common reasons that business owners decide to sell up and how they can affect the sale of a business.
By far the most common reason profitable companies are sold is retirement. In cases where family members do not possess the skills or desire necessary to run the business, the only option is to sell.
Some business owners want to achieve a sale and retire immediately. Others are attracted by the idea of transitioning gradually into retirement. An experienced Business Broker will find the correct buyer to accommodate the needs of the seller during the transition period.
Business owners may decide to sell off because of the attraction of relocating to a place with a more agreeable climate. Other reasons may include the need or desire to relocate for family reasons or professional opportunities. When relocation is involved, the time frame for the sale may be affected. A shorter time frame may require a seller to be prepared to settle for a lower price.
There may come a time in the life of any business owner where he/she is not as passionate about the business as he/she may be once was. Whether it is due to fatigue or just loss of interest, a burned out owner can have serious negative implications for a business. When you are burned out and tired, it is a good idea to sell before your loss of motivation directly or indirectly leads to a downturn.
NEW BUSINESS OPPORTUNITIES
On identifying a gap in the market, a business owner may be in a rush to seize the opportunity to make some money. At times like these, the time and responsibility required to run a business can seem like it is getting in the way of capitalizing on profit-making opportunities. A business owner may want to jettison a company to raise capital to throw at a new project. If you feel like you can no longer dedicate the time, money and effort required to make your existing business successful, perhaps it is better to sell.
PROFITS HAVE PEAKED
Most businesses will have different cycles of peaks and valleys. If you become aware that your company is on an upswing and you have a desire to do something else with your life, you may decide to call it a day and cash in. Business buyers prefer to buy companies that are growing and have a bright future. It is much easier to sell when the general outlook is good.
In companies with joint ownership structures, disputes and arguments are a common occurrence. In some cases, differences in opinion can be irreconcilable, and a working relationship becomes impossible. While the most straightforward solution to this problem is one partner buying out another partner, things are rarely this simple. In cases where both parties are reluctant to let go of their share of the company, it is often wise to bring in an experienced Business Broker to help negotiate the best solution for all.
Running a business can be stressful, even when you are in good health. If illness strikes you down, you may find that it becomes impossible to continue, leading you to look to sell the company. Sometimes health issues provide a wake-up call and a much-needed excuse to slow down and hand over the reins to someone else.
DEATH OF THE OWNER
Another reason a business may need to be sold is because of the passing away of its owner. It is sometimes a challenge to sell a business when the owner is no longer around, but a good Business Broker will be able to guide the family of the deceased through the process. Through careful collaboration with the company accountant and other administrative employees, the required information can be gathered to make a sale.
SELLING FOR A COMBINATION OF REASONS
Business sale transactions are usually the result of a combination of reasons. When buying a business, it is important to look at the motivations the business owner has for selling. This is where a qualified Business Broker can help. A Business Broker will have a wealth of experience of dealing with sellers of all types and be able to negotiate the best deal for you.
There are a multitude of other reasons for selling a business, which we will go into in a future post.
About A Neumann & Associates, LLC
A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or firstname.lastname@example.org