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 times when selling is the best course to take. A few of those scenarios are listed below.
- 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 – Sons and daughters can be disenchanted with the family business by the time it’s their turn to take over. Family members often wish to chart their own course and have different career aspirations.
- 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 convert their assets into cash.
Is your business exit ready?
If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
There are obviously many other reasons why businesses are sold. The paramount issue is that they should not be placed on the market if the owner or principals are not convinced it’s time. Even if you aren’t ready to sell, that doesn’t mean it’s not time to start thinking about it. Consider the business adage, “The time to prepare to sell is the day you start, or take over, the business.”