Selling one’s business can be a traumatic and emotional event. In fact, “seller’s remorse” is one of the major reasons deals don’t close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are issues that make selling the best course to take. Here are a few of them:
- Burnout – This is a major reason, according to industry experts, owners consider selling their business. The long hours and 7-day workweeks can take their toll. In other cases, the business may just become boring – the challenge gone. Losing interest in one’s business usually indicates it is time to sell.
- No one to take over – An owner’s children can be disenchanted with the family business by the time it’s their turn to take over. Family members often wish to move on to their own lives and careers.
- Personal problems – Events such as illness, divorce, and partnership issues do occur, and many times force the sale of a company. Unfortunately, one cannot predict such events, and too many times a forced sale does not bring maximum value. Proper planning and documentation can prevent an emergency sale.
- Cashing-out – Many company owners have much of their personal net worth invested in their business. This can present a lack of liquidity. Other than borrowing against the assets of the business, an owner’s only option is to sell it. They have spent years building, and now it’s time to cash-in.
Many business owners want to sell their business to fund their dream retirement, but don’t know where to start.
I’ve used these 5 Critical Questions to help my clients prepare and start increasing their business value.
- Outside pressure – Successful businesses create competition. That competition may be building to the point where it is easier to join it than to fight it. A business may be standing still, while larger companies are moving in.
- An offer from “out of the blue” – The business may not even be on the market, but someone or some other company may see an opportunity. An owner answers the telephone and the voice on the other end says, “We would like to buy your company.”
There are obviously many other reasons why businesses are sold. The paramount concern is that they are not placed on the market if the owner or principals are not convinced it is time. And when considering how to get ready for that day when you will be in a position to sell your business, remember the adage, “The time to prepare to sell is the day you start or take over the business.”