Why are they Selling their Business ?

Why are they Selling their Business ?

Why are they Selling their Business ?

Often we get asked: Why is the business owner selling their business?

It is an important question for some purchasers, almost a part of their due diligence. "If it is a profitable business, why do they want to sell?" is a thought that possibly crosses everyone's mind before taking the leap to acquire a booming busy business.

As business sale agents, we understand that selling your business is often a succession plan for many business owners. Here are a few reasons why business owners sell their business:

  • Retirement: It is a common reason to sell when there is no one suitable or willing to take over your business. The benefit of selling due to retirement is that there is often ample time available to plan an exit strategy.
  • Health of owners/directors or BURNOUT: A lot of small businesses can put their success down to the hard work and dedication of the owner. Once the owner is unable to continue taking an active role in the operations, the business may suffer.
  • Owners want to do something different: It may simply be that the owner has had enough of running a business and wants to turn their hand to something completely different.
  • Owners have found something more profitable that they would now like to concentrate on: If the opportunity of something more financially rewarding comes along, then it may be the case that you decide to focus all your attention on this new venture.
  • Owners and the business has Plateaued: Sometimes a business can grow to such a level that the founders of the company feel they can do no more with it.
  • Owners can see a decline in profitability coming: It is only natural that if you feel your business has reached the peak of its profitability, then you want to get out before the decline starts.
  • Concerns about industry changes: This could include new legislation being brought in, a general regional downturn, or political factors.
  • The business has reached a value that will support future lifestyle and want to cash in: If the business has been successful and has a healthy valuation attached to it, it may be that the owners would like to release this money by selling the business.
  • Your Business is an asset after all: As your broker would tell you, if you are a business owner who has owned their business for several years, or someone who has just purchased a new business, these factors should always be kept in mind.

One day or another, you will be reaching one of the above stages and would be considering selling. Speaking to a business broker on time and putting together an exit plan would ensure you have given yourself and your business all the opportunity to guarantee a good sale price and a smooth exit with compromises.