There are plenty of entrepreneurs that dream for the day that a giant corporation or investor group will buy them out of the business for a huge profit. The truth is that many companies that are sold do not pay out these massive amounts but it is possible to make a great deal of money if you have built a profitable business that you have made scalable. The duration that the business has been at a certain level of profitability will help increase prices of offers. Setting a minimum price is important especially if you plan to retire off of the fund received from selling the company. The following are factors that need to be considered when doing something as important as selling a company that you have spent years building.
Future Of The Business
The future of the business is the most important factor when selling a business. Most owners will source out their work if the company is going to continually earn without having to do any work. There are specific niches of business that could become obsolete with new technology that is being developed in the machine learning and artificial intelligence space. The staff not being as strong as in the past can also be a reason for selling a business as an owner wants to sell before their productivity and profits both drop.
Future Of The Staff At The Business
Building a business is much like building a family as we spend so much time with our coworkers. People become great friends quite often at work so it is going to be natural to ask about the future of the staff at the business. The best case scenario is a buyer when selling a business that simply wants to leave things the same as the business is profitable as it is. One or two tweaks will not stress out staff even more as they expect changes. There are going to be some people that will be let go when a business is purchased though. An accountant or marketing team could be laid off as the company purchasing the business already has fully staffed departments to help. Be honest with your employees as well as they shouldn’t have to come in to find that their business was sold which will give them the ability to look for other opportunities.
Opening Offer Price
There is a chance that a venture capital group will be interested in purchasing the business. They will give the company a valuation and this can be a huge boost in confidence or make a business owner reconsider selling. Accepting the opening offer price can be done but often times this is not going to generate the most money for the company. Using offers received and taking a look at potential buyers is important as well as the last thing anyone wants is to decline a few offers only to have the funding for the purchase fall through with the buyer candidate chosen.
Simply Want To Retire With The Company Being Put In Good Hands
There is a time in everyone’s professional life that they start to get sick of the grind that they once enjoyed. Retiring is the goal of nearly everyone and being able to do this comfortably at a relatively young age is quite the opportunity. Putting your business in the hands of another might feel like a strange thing to do. Make sure that the person or company that is purchasing the business has the best interests of the business in mind. With this being said, if a competitor is going to purchase the company for a huge price then close it down, this can be considered as long as your current staff gets a reasonable severance package.
Getting The Investor’s Permission If Need Be
There could be investors in your business that will need to approve on the price the business is sold for. If you are the majority shareholder though then you can sell your shares allowing another company to handle the investors. Most investors are going to be reasonable about this especially if they are making quite a bit on their original investment. There is a chance that one of the investors could buy you out of your shares so take this to the negotiation table before shopping around for buyers. The investors could buy you out and pay you quite handsomely to continue running the business until they can find a suitable replacement.
Selling a business that took you years to build can be a gratifying and terrifying event depending on the circumstances that are leading you to sell. You have put so much hard work into your business make sure that you are paid appropriately for it. Hopefully you will be able to retire if desired or even start a new company with the capital you receive!
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