The decision to sell a business is personal, and the reasons behind it are rarely simple. Several, however, recur often enough to be worth considering in advance, because each has different implications for timing, preparation and the type of buyer best suited to the business.
1. Retirement
For an owner, retirement requires a decision about the future of the company itself, and many conclude that a sale is the most practical way to realize the value they have built.
The usual paths are a transfer to a family member who has been prepared to lead the business, a sale to one or more employees who know the operation well, or a sale to an outside buyer seeking entry into the industry or the region. Each carries different considerations for valuation, financing and the length of the owner’s involvement after closing. Internal transfers, for example, often rely more heavily on seller financing.
2. A change in direction
Some owners are not ready to stop working but are ready to stop owning. Fatigue, an interest in a different industry, or a preference for a role without the obligations of ownership are all legitimate reasons to sell, and a transaction can be structured to accommodate a continued role during the transition if that is what the owner wants.
A confidential valuation
A valuation establishes what the business would likely command today and identifies the factors that could improve its value before it goes to market.
3. A business built to be sold
Some founders build a company with an eventual sale as the objective from the outset. This is common in industries where a smaller company with a distinctive product, process or customer base can become strategically valuable to a larger competitor.
4. The business needs more than the owner can provide
Not every sale follows a milestone. Some owners recognize that the business requires capital, management depth or capabilities they are not positioned to supply. A sale to an owner who can provide them is often a better outcome for employees and customers than a gradual decline.
Even a business with modest profitability can be valuable to the right buyer. A product line that complements another company’s offering, a loyal customer base or a proprietary process can attract genuine interest from strategic buyers.
Whatever the reason, earlier planning preserves more options.
To discuss the sale of your business, contact Twelve31 Advisors at 402-957-1231 or info@twelve31.com.
