My neighbor asked me, "Why would anyone sell a successful company?". He may not understand why anyone would depart a business that was doing well. After all successful companies get sold all the time.
Therefore why do these business homeowners sell? The short answer is that almost all closely held businesses sell for human reasons, like burn out, retirement, illness, partnership disputes, family issues or other personal reasons. Sometimes the business is okay however the creature running the business desires a change. To understand this better it is key to understand the other choices for exiting a business.
Shut the Business/Liquidation
Closing a business that is profitable never makes sense. Even if the assets are liquidated the worth is possible to be pennies on the dollar versus selling the business as a going concern with workers, customers and a name that is intact. Not solely does the business owner get all-time low value but the workers, vendors and customers are hurt by this type of exit.
Accident, Illness or Death
Nobody desires to exit their business this manner, however many do. The loss of an owner not solely creates tremendous issues for the family however also creates a leadership void in the business. Even the most competent management can struggle when a key business leader is lost to a heavy accident, illness or death. No one plans for this sort of exit but several end up exiting the business this way as a result of they failed to make an alternate plan.
Succession
Succession by a loved one or key employee has its benefits. They apprehend the business, its product or service, workers, customers and vendors. Succession can be operationally successful for the exiting owner if they create certain the successor is carefully selected, qualified and groomed for the position. The owner must take care not to create an emotional selection of a relative or favorite employee but instead opt for the successor with the proper skills to steer the corporate into the future. You are not seeking an "Employee" mentality but an "Owner" mentality. If that rare person can be found within the business who can build the transition to Owner, they typically don't have the money needed to purchase the business. They are conjointly likely to wish to pay less for the business as familiarity will blind them to several of the price drivers of the company. Thus though succession can be operationally successful it's rarely a money success for the outgoing owner.
Sell
Closing or liquidating the business minimizes the price to the owner. Accident, illness or death forces the issue on the owner. Succession provided a very restricted pool of options with restricted financial reward.
Selling on the opposite hand permits the business owner to determine their ideal timing, maximize the price of the business they worked so hard to build, coordinate the employment of the sale proceeds for money coming up with and align their personal goals with the sale of a business. Selling the business allows the business owner to form a wealth event and typically vital on-going passive income while not having to run their business.
No matter they're, human reasons are invariably pushing and pulling on a business owner. Burn out, stress, divorce, illness, partner disputes and restricted growth capital are some of the human reasons that push owners out of the business. Retirement, enjoying life, relocating, a new business opportunity and passive income are some of the explanations that pull a business owner out. No matter the motivation, the elemental reason a business owner chooses a sale as their ideal exit arrange is control. The business owner chooses to perceive the price of their business and to proactively pursue the right buyer and the right price. By selling a business you select to exit your business by selection, not by force.
Author Resource:
Hulala has been writing articles online for nearly 2 years now. Not only does this author specialize in Business
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