Why Should You Sell Your Business?
Guest Post by Edgar Fernandez
Guest Post by Edgar Fernandez https://www.linkedin.com/in/edgaryourinvestor/
Here are the 9 main reasons why a business owner might want to sell their business:
Up-Cycle – If your industry is on an up-cycle, your business’s valuation multiple will be higher.
Relocation – Some businesses are tied to a specific geographical radius.
Shiny Object – You might own another company or be starting another company and lost focus or interest in the old company.
Retirement – Retirement is probably the most common reason why businesses go for sale, which is good because it preserves the jobs that the company provides.
Money – This could be for too many reasons to list both positive and negative.
Partners – Working with a bad partner is just as bad as staying in a bad relationship, and the company will usually benefit if one partner buys out the other or if they both exist.
Burn-out – This could be due to an underperforming partner, a change of priorities, new life circumstances, or being overworked and overstressed.
Health – In a health crisis, companies are sold to pay for medical expenses or because the owner literally can’t operate the business anymore.
Death – This could be the owner’s death, a partner’s, or a spouse’s.
Before we turn each of the 9 reasons into a question that you can ask yourself, let’s work through some high-level questions:
Are you happy at least 80% of the time at work?
Do you wake up excited to start the day and tap dance to work?
Does your business revolve around something that you’re passionate about?
What would you do if money wasn’t an issue, and you could do anything today?
Does the business interfere with your family life?
Do you wish you had more free time? What would you do with it?
Now let’s revisit each reason and see if one applies to you:
Upcycle – Is your industry currently in an upcycle? How far apart were all the previous upcycles, and what is the average amount of years between each upcycle? Do you see yourself successfully running your business until the next upcycle or should you sell now and cash out while you can?
Relocation – Can you successfully replicate your business in a new location?
Shiny Object – Is the old business wasting mental bandwidth that could be used on your main business? Can selling the old business fund your new idea with some runway?
Retirement – Age aside, do you have enough set aside to fund a comfortable retirement? If not, how much more runway will selling the company give you?
Note: (If you’re planning to turn the key on your business (close it down), don’t! Reach out to an M&A advisor or at least list it on Deal Stream and BizBuySell yourself at a 1x multiple for a quick sell).
Money – Are you eyeing an asset to treat yourself? (Make sure to communicate this with the buyer to see if that speeds up the transaction).
Partners – Do you feel like filling a restraining order on yourself for your partner’s safety? I’m joking, and on a more serious note, is your partner keeping up to the standards that were agreed upon in the original partnership agreement? Do you feel like you’re doing all the work and taking home the same as them or less?
Health – Will selling cover your medical expenses? Are you physically and mentally capable of maintaining the company?
Death – Would selling the company get you through or assist with any of the stages of grieving? If yes, which one(s) and how?
If you decided to sell, here are some questions that you might want to address quickly:
What’s the worst that can happen or what’s your biggest fear, and who/what can address it?
If the worst happened, would there be any damage? If yes, how could it be repaired?
What are the short-term and long-term benefits and outcomes?
What would selling do to your finances? Do you need controls in place for managing said funds?
What is it costing you not to sell physically, mentally, and financially?
What are you waiting for?
See you there!
Sebastian Amieva
Mergers And Acquisitions Expert
If you need help selling or buying businesses Contact Me
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