Why Sell?

There are a number of different reasons why selling a business can be an emotional event. The business may have been in the owner’s family for generations. The owner may have built it from scratch or bought it and then poured the necessary energy into it to grow it into a successful, profitable business. For these and many other reasons, “seller’s remorse” is actually one of the major causes of a deal falling through. However, despite the emotional ties to a business, there are times when selling is the best course to take. Here are just a few examples of those times.

Burnout

According to industry experts, burnout is a major reason owners consider selling their businesses. Over time, the long hours and 7-day work weeks can take their toll. On the opposite end, business owners who thrive on challenge may get to the point that the business has just become boring – the challenges of creating it or growing it has been replaced with the mundane daily activities of running it. Losing interest in one’s business usually indicates that it is time to sell.

No succession option

Sons and daughters may be disenchanted with the family business by the time it’s their turn to take over. They may have their own dreams to fulfill that do not include the family business. They may also not be qualified to take over the business and therefore it would be best to sell the business than risk losing any value.

Unexpected circumstances

This is the number one reason a business owner should make plans about selling even if he or she is not planning to sell for many years. A good question for a business owner to ask is, “If an unexpected circumstance should occur tomorrow that would require me to sell my business, what would I wish I had already done?” Unexpected events include such things as accidents, illness of owner or family members, divorce, and partnership issues. Unfortunately, these events are seldom predicted, and too many times, a forced sale does not bring maximum value.

Need to cash out

The need to cash out may be caused by an unexpected circumstance, such as a costly accident or illness. Many company owners have much of their personal net worth invested in their business. This can present a lack of liquidity. In such situations, an owner in need of additional cash has two options: borrowing against the assets of the business or selling the business.

Outside pressure

Successful businesses create competition. There are times when a business owner discovers that the competition has built to the point where it is easier to join it than to fight it.

An “out of the blue” offer

There are times when a business may not even be on the market, but someone or some other company sees an opportunity and makes an unexpected offer. This may be a great time to sell as the owner is likely entering the negotiations from a position of strength.

There are obviously many other reasons why businesses are sold. The most important factor is that the owner is convinced that it is time to sell and has a clear understanding of his or her reasons. And, whether that time is now or many years in the future, the wise owner will consider the following: “The time to prepare to sell is the day you start or take over the business.”