- Common reasons for selling a business
- How health can impact your decision
- How to weigh the opportunities for selling against the cost of keeping a business
- Why you should always have an exit plan
- How to find a qualified buyer
You’ve built your business from the ground up. You had an idea, a skill, or some sort of expertise that allowed you to succeed and create something you’re proud of. You’ve given people jobs, you’ve helped people succeed, but you’re starting to get a nagging feeling: maybe it’s time to move on.
“Should I sell my business?” is an all too common question in this day and age. Many people from the Baby Boom Generation started companies over the years, and now many of those people are looking to get rid of those companies.
But it’s not only Baby Boomers who are looking to offload their enterprises. Many young entrepreneurs have gone as far as they want to go with their businesses and are looking to make a graceful exit.
Whatever your position in life, deciding when to sell your business is never an easy call. At Acquira, we’ve encountered sellers from all walks of life and we’ve seen a few commonalities that might help someone who is thinking about selling make the right decision – whether they should list their company or it’s just not the right time.
It’s Time For A Change
By far, the biggest reason that people want to sell their business is retirement. They reach a certain age and they want to relax. After decades of pouring their energy, resources, and time into building a company, it makes sense that they would want to take a break. Specifically, these individuals are ready to retire and have no children waiting to take over the business.
Instead of seeing their legacy go to waste, they decide to sell the business to someone who will oversee it and make sure their employees are taken care of.
The Serial Entrepreneur
It’s also possible that the owner may just be looking for new opportunities. You’ll hear the words “serial entrepreneur” bandied about quite a bit in and for good reason – people often just want a change. They’ve gone as far as they can with their current business and they have a new idea they want to try out. After all, Elon Musk is perhaps best known for his work with Tesla, but he’s also been known to spend some time looking at the stars and burrowing underground.
The point is, it’s very common for someone to start a company, build it up, and then sell it before moving on to a new project. If this type of entrepreneur sounds like you, give us a call to learn more about how we can help with your next business acquisition.
Sometimes, people may simply want a change of pace. Maybe they’re sick of dealing with the cold or the weather’s too hot. Sometimes they want to move to a different economic environment and start something new.
It’s also very common for business owners to relocate because of family. Maybe their spouse gets a great job opportunity in another state or their child gets accepted into a prestigious prep school.
Changes to health can be another big motivator to sell a business. Oftentimes, business owners get to an age where they can’t handle the physical labor anymore. If there’s no one capable of picking up the slack, the business could be negatively affected. This may prompt them to start looking for someone to buy the company.
Owners or their family members can also be stricken by sudden illnesses, causing them to have to redirect their attention and resources. It’s possible that a relative falls ill and the owner has to relocate to take care of them quickly.
At Acquira, we’ve encountered many sellers who are looking for a change for a variety of reasons. We work hard to connect the right buyers with these sellers to ease the transition and make sure everyone comes out a winner.
If any of the above sounds like you, reach out to us and we’ll connect you with a qualified and capable buyer who will be sure to maintain your legacy.
The Value Of Your Business Has Increased
There are other situations where the owner has no thought of selling their business. That is until they hear an offer piques their interest, and it becomes clear that the benefits from selling outweigh the overall cost of keeping the business going.
To determine if a deal is worthy of consideration, the owner must compare the offer against the returns they’re currently receiving and the projected amount they’ll earn.
In short, how does the projected business valuation compare to the offer?
Too Much Risk
No one will argue that running a business is an easy endeavor. It is often filled with stress, late nights, and long hours. But it also offers a type of freedom that can’t be found anywhere else.
In the beginning stages of a business, it’s common for owners to take more risks because they simply don’t have much value in their companies to lose. When they take chances, they see bigger rewards and they grow faster.
However, as the company grows, its value increases. This often causes owners to become more conservative in how they do business. If they make too many changes they may risk losing what made them successful in the first place. Moreover, older owners become more risk-averse because they simply don’t have the time to correct the ship if it goes too far off course.
Anyone who owns a business should be cognizant of when their exit is. A company may not be in bad shape, but selling it can still be the right business decision.
When To Sell A Business: There’s No Rule Of Thumb
Whether you’re looking strictly at the numbers, you get an offer that seems too good to turn down, or you feel the need to change – there isn’t one specific indicator to tell you when it’s a good time to sell.
Instead, it’s usually a combination of factors. Maybe the knees are starting to creek more than they used to and the economy is buzzing along, which might make you start thinking of selling. Or perhaps your parents are getting older and you’d like to be closer to them. There is no mathematical equation to determine exactly when to sell your company.
One thing that many business experts and advisors agree upon is that the best time to sell a business is when it’s doing well because that’s when you’ll see the best offers. A “for sale” business will attract attention regardless, but the companies that are already performing well will receive the best offers.
The best time to sell a business is when it’s doing well.
On the other hand, in the video above, serial entrepreneur and the Chairman of VaynerX, Gary Vaynerchuk argues that you should only sell a business when you’re unhappy or when you have no other choice.
The truth is, selling a business is a deeply personal choice that requires weighing a number of factors before you hang up that “for sale” sign.
Maybe you want to start another business, maybe you want to spend more time with your family, or maybe someone is offering you more money than you ever imagined your business was worth… These are all factors that will impact your decision.
Plan Early And Don’t Be Too Hasty
Whatever the factors are, you should take your time to decide. You don’t want to sell your business and regret it. Similarly, you don’t want to hold on to a company that will go belly-up in a year.
Stress can often be avoided if you have a built-in exit strategy. Perhaps from day one you already know what parameters need to be in place for you to consider selling your business. But not everyone has this amount of foresight. If you don’t have an existing exit strategy, make sure to consider your options carefully – look at your business plan, look at any potential offers, and consult with the people closest to you.
You should also consider what type of buyer you want to deal with, especially if you’re concerned about your legacy. Building a company with a strong legacy is part of the empowered stewardship that we believe very strongly in. Selling to a big private equity firm often means the business will lose its identity over time. Selling to small business owners – people already owning their own company – often means your legacy will remain intact.
Before The Sale
If you’ve weighed your options carefully and decided that you are ready to sell, the journey isn’t over. There are several things you need to do to prepare your company for sale. Considerations to take into account include:
- Financial audits
- Ensuring your technology and systems are up-to-date and efficient
- Ensuring your team is happy and aware that you’re thinking about selling
- Timing of the sale
- Finding the right buyer
- Begin preparing for the transitional phase: Consider who should be in a management position once the new owner takes over.
- Consider what advice you can offer the new owner to ensure they succeed and your employees are taken care of
You will also need to lock in a valuation for your company. Knowing how much your company is worth will ensure you get a deal you’re happy with. However, be careful not to quibble over a few dollars of valuation. Make sure to also pay attention to the quality of the person buying the company. After all, you want to ensure that your legacy is maintained and your people are cared for.
The best advice is to ensure you have an exit plan and be ready to pursue it when your company is at its maximum value or when life starts telling you it’s selling time. If you have any questions about selling your business, let us know in the comments below or contact us for further advice on selling your business.
If you’re looking for a qualified buyer, you can use Acquira.com to reach ready-to-buy acquisition entrepreneurs and close a satisfactory deal quickly. We recommend starting with our Acceleration Gauntlet to familiarize yourself with the process. The Acquira team will provide you with expert assistance throughout the process. Give us a call to learn more.
- There are many reasons for selling a business, so make sure you’ve considered your decision carefully.
- It takes work to prepare a business for sale.
- Considering the transition phase and what the new owner will need is paramount to ensuring the continued success of the company and its employees – do everything you can to help.
- Acquira can instantly connect you with qualified buyers.
Acquira specializes in seamless business succession and acquisition. We guide entrepreneurs in acquiring businesses and investing in their growth and success. Our focus is on creating a lasting, positive impact for owners, employees, and the community through each transition.