Often times when assisting business owners to exit their company, they are faced with the Maltese cultural association that a person selling their business is a sign of a failed business. Though this is a highly misrepresented interpretation and there may be a host of reasons for a shareholder to undertake the sale of their business, some of which are discussed below:
Planned strategic exit
As with a founder preparing an initial business plan for the company, there is the importance of having a planned exit. This will allow the owners to optimise their exit and allow them the greatest financial gain.
Financial gain
Selling your business can allow for significant financial gain allowing the business owners to unlock the value that they have worked so many years to build up.
Market changes
The business landscape is constantly changing and the reason to sell could be that the owners are anticipating a downturn or they do not wish to participate in the industry’s next significant shift, for example implementing new legislation. Thus, selling the company is a proactive choice made by the owners in the knowledge that a future owner has the energy and drive to adapt to such changes.
Lifestyle choices
Whilst the business environment may be changing the business owners’ personal life may also be undergoing a shift. The business owner may no longer see the value or have the passion to own the company when there could be other ways to utilise the wealth locked in the business and undertake a new venture which may more closely reflect their current focus.
Better opportunities
An owner may be of the opinion that there are wider opportunities outside of the company in possibly a different sector. Thus, the company’s sale reflects the owner’s judgement that they would prefer to focus on other areas.
Strategic merger and acquisition
In certain instance a larger firm may wish to acquire or merge with the entity. The sale is thus reflecting the belief in the viability of the business through this third-party acquisition.
Conclusion
Whilst there may be a multitude of reasons for a business owner to exit their company than the above. The decision to sell a business is often not straightforward, and is often wrought with contrasting thoughts in the business owner’s mind, where one needs to factor in all of the conflicting scenarios that may be driving a sale.
Though till the decision is made to sell the company, a business owner should follow Bo Burlingham advice being, “You should build a business today as if you own will it forever but could sell it tomorrow.”
idisav 