If you are thinking about selling your company soon, you likely are interested in learning about other people’s experiences. You may also want to learn about aspects like the selling process, identifying the potential buyer, and pricing your business. All of these are essential in making the right decision.
Selling your business is a huge undertaking that needs massive research, planning, and calculations. There’s also the emotional aspect that comes to play and tends to leave many entrepreneurs experiencing feelings of depression and remorse. That’s why it’s essential to take your time to ensure it is what you want to do. In case you are unsure, here are some questions to guide you through:
- Which do I have more passion or exhaustion?
- Could a sale solve my problems?
- Will someone buy us?
- What price do I want for the business?
- Will the money make me happy?
- What happens to my loved ones?
- What happens to my employees?
- How do I know I’m getting a good deal?
- What are my other options?
- What will I do with my time, post-sale?
- Do I have a succession plan for my business?
- Is my business/industry growing or declining?
Why people sell their businesses
Entrepreneurs sell their business for a range of reasons. Some do it as a strategic plan, while others, as a way, resolve limitations. Lifestyle changes, partner disputes, negative industry changes, burnout, declining revenues, and new opportunities are common reasons people cite for selling their business.
Since different eventualities inform the selling decision, no single formula is right for every situation. For most companies, the decision to sell comes down to the individual, economy, and industry circumstances. It can be as simple as the owner losing interest or feeling tired or that an overhaul is needed, and the owner doesn’t have the energy or skills to do it. Other businesses run out of money and fail. So selling becomes the next best option.
Still, business experts and entrepreneurs who sell their company agree on one thing: preparation is key. Whether it’s products and service business, owners need to prepare for the sale to ensure they get the most value out of the process.
When is the right time to sell your company?
Timing is critical when selling a business. Serial business owners who sell for-profits have mastered the art of timing. They know that timing can make an enormous difference in what they take away from the closing table.
Despite this, there are situations where an owner cannot be selective in timing. For example, a business real estate agent trying to sell a property at a lower price than its market value because of an emergency. Here’s how business owners decide it’s time to sell their company.
When the numbers make sense financially
Some businesses start as a hobby and turn out to be big. Take TechCrunch as an example. It began as a blog in 2005 but was later sold to AOL for about $25 million. Deadline Hollywood is another great example of a hobby that spun into great businesses. In many cases, the founders get extremely lucrative deals – some which pay up much more than what the company is worth at the moment. Smart owners know that these chances don’t come along often, so they grab the opportunity and make a kill.
When starting a new venture
Some entrepreneurs are into the business of creating new ventures and selling them once they grow. So, they identify a business opportunity, open a new company, nurture it until it’s successful and sell it off for profits. Such entrepreneurs aren’t interested in continuing to grow the business once it’s past a certain stage. So they sell it off, get more money to invest in their next venture.
When growth hits a plateau
It is not uncommon for businesses to grow exponentially and later on hit a plateau. The problem with this is that companies need to grow constantly to remain successful. So, when intelligent business owners notice that their successful business will not grow any further under their leadership, they either decide to sell the business to someone capable of growing it or choose to continue running it and risk collapsing the company in the long run.
When there is no more interest
Boredom and burnout occur from time to time. Successful companies started as a dream and vision, and after plenty of effort, time, and devotion, they begin to make nice profits. But sometimes, exploding revenue and profit isn’t enough to hold the entrepreneur’s interest. Unfortunately, when an owner loses interest, it may impact decreased ad revenue, sales, and traffic on the business. So, entrepreneurs will immediately know it’s time to sell when they no longer have the passion they once did for the company and are not actively seeking remedies.
When there is a need for money
Adversities happen, and when they do, they may require a considerable amount of money to resolve. Numerous potential situations could need a business owner to liquidate their assets or even sell the company. Some common examples include a medical emergency, legal issues, divorce, and foreclosures. Some entrepreneurs sell one business to save another from collapsing. According to one business owner, he knew it was time to sell his business when his wife had a medical emergency and had to travel overseas for special care. He didn’t have enough money to foot the medical bills.
When upcoming megatrends threaten to marginalize the business
The business world is dynamic. New technologies pop up every day, and trends keep shifting from time to time. Companies need to stay on top of all these changes to remain relevant in the market and outshine their peers. But sometimes, an entrepreneur recognizes an upcoming megatrend that is way beyond their skill set or ability. In the worst cases, the trend could be pointing towards marginalizing the business or making it irrelevant. When this happens, entrepreneurs might decide it’s time to sell the business through a business broker and try something else.
When a new opportunity arises
Selling a company doesn’t always have to be borne out of negative experiences. Sometimes, a better opportunity comes along and makes the entrepreneur plan an exit strategy. If we use the megatrend point as an example – an entrepreneur might realize a lucrative opportunity to venture in. So, in as much as they don’t have adequate skills to navigate their old company through the upcoming megatrend, they could apply what they know to make the most of what the new trend has to offer.