Why sell a business?
Why sell a business?
They may seem an unusual question and it probably is as the answer is obvious – because that’s what the owner wants to do.
The successful sale of a business requires both a motivated seller and a motivated buyer. Part of that requirement includes the seller disclosing all details of the business to the buyer and often requires the buyer making disclosures to satisfy the seller.
The motivation that starts the process for the business to change hands generally starts with the seller. That is, the seller gets to a point where they believe they no longer have the interest, skills, time, money, enthusiasm, patience or energy to get out of bed each morning and head to their business.
A lot of business owners are also curious about selling their business but not sure it is the direction they wish to go. Many times they think they are and so step out to see if there is a buyer willing to buy their business but are not ready to ‘close the sale’ because they simply are not ready to sell a business.
In 2011 I put together a valuation for a business owner that had a really nice niche business selling something he was very passionate about. He’d reached an age where he thought he was ready to retire and letting go of the hassles of running his business. However, he was unable to move forward and sell the business as he wasn’t sure how he would spend his time once he sold. For that reason, the seller was unable to close a deal when it came along because he simply had not got that worked out.
Conversely, I spent 11 months working with a business buyer to take over a family business that had passed through three generations and there was no fourth generation with an interest. The business had been led by one family member for 42 years and he had supported and provided an income to his two brothers and three of his cousins and all their children. He knew he wanted to retire but he also knew he wanted to ease into it and so one of his conditions of sale was that he be allowed to work part-time in the business for 12 months before officially retiring and use that time to meet with all the suppliers and main customers that had been part of his business and world. The buyer was very pleased as this provided the buyer with access to all the knowledge and many years of experience and so it was a win for the buyer and just as importantly, a win for the seller.
If you are thinking of selling your business what is your ‘why?’ That is, why are you selling your business and do you have the answers that make sense to you? For example,
- Will you get to keep enough money after you sell and pay all your taxes and fees?
- If you plan to retire, will the sale bring enough money to fund the rest of your life and your life style?
- The business has been a talking point with family, friends and provided recognition in your local community. How will this affect your social life?
- What will happen to your employees and will they be taken care of as well?
- How will a new owner treat your loyal customers?
- Probably the most important reason of all to answer. Owning and taking care of the business has been a reason for you to get out of bed each morning. What will be your new reason?
Owning and operating a business brings tremendous challenges and rewards. Making sure there is something positive and satisfying to move to will be the difference between being willing to sell or not, or as I like to ask “What’s the ‘why’ you are selling your business?
Once the ‘why’ is clear, the next step for most business sellers is to know what their business is worth and so I do a business valuation. A lot of business sellers also want to know how much they get to keep after paying their taxes so for those people I organize a tax structuring report.
Are you thinking about selling your business and know your ‘why’? Would you like to know the value of your business? If you would like more information please visit my webpage Business valuation.
For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.