Like selling a home, the most common question business buyers ask is, “why are you selling it?” The reason may not be malicious; yet, it may cause embarrassment if you told the truth. First, know that your reason for selling the business is your personal decision, and you have the right to feel the way you do. With that said, here are common reasons why business owners decide to sell their business.
Retirement
Retirement is a common reason for an owner to sell his business. Once he has reached a point in his life that he no longer wants the responsibility of running a business, and want to take it easy, retirement is an option for him. If he cannot find someone to take over the company, the next best thing is to sell it. Selling the business due to retirement provides ample time to plan an exit strategy.
New Opportunities
New opportunities or interests also represent another common reason for a business owner to sell. However, oftentimes, the pursuit of new opportunities may mask the underlying cause for selling the business. For example, perhaps the owner doesn’t want to admit that he is burned out. On the other hand, new business ventures come up, and maybe the owner genuinely want to go down a different path in their career.
Declining Revenues
Reasons out of the business owners’ control, such as economic downturn and the high jobless rate, could contribute to why the owner wants to sell the business. Most owners recognize the challenges and choose to push through for a period of time, while others feel he or she can’t handle it and decide to sell the business. Declining revenues results in enormous amounts of stress.
Negative Industry Changes
Buyers often depend on sellers to disclose all information about the business before jumping into the venture; unfortunately, this isn’t always the case. Perhaps the seller knows that imminently or further down the road, the industry, customer, or other dynamics will change and negatively impact the company; hence, the company may face strong headwinds. For this reason, the buyer won’t tell the seller everything to make a sell. Therefore, it’s up to buyers to perform comprehensive due diligence before agreeing to acquire a business.
Partner Disputes
The start of a partnership begins with lots of hope and ambition to make the business a success. Similar to a marriage, business partners eventually have disagreements; some of which may lead to pursue dissolution of the partnership. Common reasons for the disputes include financial and operational conflicts. In many situations, the agreement between partners is to divest and part ways. Partner separation could present an excellent opportunity, but the buyer should still understand driving force(s) of partnership dissolution.
Having your own business is a tremendous accomplishment, but perhaps now you’ve decided to sell your business. There are many reasons to pursue a sale of your business. Regardless of the reason, be honest with yourself and potential acquirers.