My neighbor asked me, "Why would anyone sell a successful company?". He may not perceive why anyone would go away a business that was doing well. After all successful corporations get sold all the time.
Thus why do these business house owners sell? The short answer is that the majority closely held businesses sell for human reasons, like burn out, retirement, illness, partnership disputes, family issues or different personal reasons. Typically the business is fine but the creature running the business desires a change. To understand this higher it's key to understand the other options for exiting a business.
Close the Business/Liquidation
Closing a business that's profitable never makes sense. Even if the assets are liquidated the price is possible to be pennies on the dollar versus selling the business as a going concern with employees, customers and a reputation that is intact. Not solely will the business owner get all-time low value but the staff, vendors and customers are hurt by this sort of exit.
Accident, Illness or Death
No one needs to exit their business this manner, however many do. The loss of an owner not solely creates tremendous problems for the family but conjointly creates a leadership void in the business. Even the most competent management will struggle when a key business leader is lost to a significant accident, illness or death. Nobody plans for this sort of exit but many finish up exiting the business this method as a result of they failed to make an alternate plan.
Succession
Succession by a family member or key employee has its benefits. They recognize the business, its product or service, staff, customers and vendors. Succession can be operationally successful for the exiting owner if they make sure the successor is fastidiously selected, qualified and groomed for the position. The owner should take care not to make an emotional selection of a relative or favorite employee but instead opt for the successor with the proper skills to steer the company into the future. You're not seeking an "Employee" mentality however an "Owner" mentality. If that rare person will be found in the business who can build the transition to Owner, they typically don't have the money required to get the business. They are also probably to need to pay less for the business as familiarity can blind them to many of the price drivers of the company. So though succession can be operationally successful it is rarely a financial success for the outgoing owner.
Author Resource:
Popoty has been writing articles online for nearly 2 years now. Not only does this author specialize in Business
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