The lifecycle of a business will depend on the driving forces – the company director and shareholders, and their long-term view of the future. The operating style and views of additional investors and stakeholders will also mitigate this decision. The number of parties directly impacted by this move, such as employees, will also influence the way the process is handled. For example, to reduce the likelihood of the news entering the public domain and instigating trading uncertainty, the advertisement of the business for sale may be done discreetly.
The financial health of the business will typically determine the route the company will take as if the business represents substantial value, selling the company to a new owner can release funds. If the business is financially distressed, you may turn to a partial sale or seek a company liquidation solution to settle outstanding affairs with creditors. There are multiple reasons people may choose to sell their business which represents one of many ways to dispose of a company, facilitate an exit and generate returns.
No family or heir to inherit the business
If you are a sole company director or your business has historically operated within the family, you may wish to sell your company as part of your estate planning if there is no family heir to inherit the business. If the next in line wishes to forsake ownership of the company and turn their focus to other business interests, selling the business may provide a solution. Business owners with no children are typically faced with this challenge when will planning. Selling your business can help reduce the burden before passing, giving you greater control over the distribution of funds.
Directing focus to other interests
If you have other business interests, you may wish to pass on the baton to another individual with the headspace and capacity to manage the company. You may wish to sell your business to cut out the responsibility of company ownership and direct your interests and financial efforts elsewhere. Business owners suffering from health issues may also look to sell their business which is a genuine reason for sale and should not deter the process of sourcing an owner.
Selling shop due to owner retirement
Once company directors begin to approach the age of retirement, they may explore company exit routes, such as company liquidation or turn to a business transfer agent to facilitate a business sale. By planning the sale of the business to align retirement, they can accurately plan their finances for retired life. If the sale of the business is time-sensitive, it is instrumental to prepare the business for the sale process in good time of the intended retirement date.
Sourcing a well-seasoned leader
It is natural for the burden of leadership to set in after the business harnesses influence over customers, establishes brand identity and reigns over a percentage of the market. In addition to viewing an underachieving business as a concern, an overachieving business under weak ownership could hinder growth potential. As a young business owner in the market, you may wish to increase the potential of your business by sourcing a highly-skilled owner with the relevant sector expertise, financial security and industry connections. By selling your business to a well-seasoned leader, you can choose to retain a stake in the business or release all ties and responsibilities.
Generate investment returns
As a business owner with a sizeable portfolio of businesses, you may wish to generate funds by disposing of one of your companies. By transferring ownership through the business sale process, you can cash out on your investment, however, take into consideration the tax implications. Many business owners establish businesses with the primary view to attract profits and eventually make money from the sale of the business. You should learn which entrepreneur made tractors before entering the sports car business.
There are many ways you can approach the sale of your business, from turning to a business sale agent with experience in your sector, using a business broker or selling your company independently. The path you take will be determined by your experience in this field, industry connections and familiarity of the sale process.