It is quite common for small companies to want to sell due to various triggering events, namely a health decline, illness, divorce, partnership issues or even a decline in business. These are fairly understandable and straightforward. A much more difficult reason for sale is simply wanting to retire and enjoy the life. Here is why.
Burnout is one of the reasons that drives long-term business owners to retire from their businesses and move on with life. Even though some buyers may have trouble accepting burnout as a valid reason for sale, losing passion and drive is considered perfectly natural.
In business circles, it is often said that a business owner should think about an exit strategy from the day of opening the business. But how realistic is this? You would be hard-pressed to find a business owner thinking about getting rid of their business right from the very beginning. Instead, majority of them are thinking how they can take off and later on how to further improve it.
Buying a business can be a daunting task. The buying process involves many steps and it is, therefore, possible to overlook some details and end up buying a pig in a poke. In general, most buyers get the help of professional intermediaries – accountants for verifying inventory, accounts receivable and payables, a law firm for dealing with the legalities and a business broker for negotiating the deal
While there is no definite answer to this question, marketing research suggests that the market will be soon flooded with businesses for sale as more and more baby-boomers reach retirement age. In the USA, majority of business owners appointed their age to be the primary reason behind selling their businesses. Another survey supporting this argument found out that three quarters of the US business owners with revenues between $1 million and $150 million are likewise looking to sell within the next three years. Despite all of this, the number of baby-boomers in Thailand is significantly smaller than in the West and, therefore, the situation is likely to only occur on a smaller scale.
Succession plan in family businesses may not be as prevalent as it might seem as only about 28% of these businesses have such plan in place. The rest might be considering selling their businesses to someone outside their family. When it ultimately comes to selling the business, here are a few points to consider.
Buyers can be categorised into one of the following groups although some buyers can fit into more than one. The groups are: The Individual Buyer – This is typically an individual with substantial financial resources, and with the type of background or experience necessary for leading a particular operation. The individual buyer usually seeks a business that is financially healthy, indicating a sound return on the investment of both money and time. Almost all the purchasers of the smaller businesses fall into this category.
Sellers: Do not have a valid reason for selling. Are testing the waters to check the market and the price. Overprice their business. Do not disclose all information. The reason they might want to sell is that the business does not prosper, faces environmental problems or is challenged by new competitors. Failed to consider financial, tax or legal implications of selling their business. Are unprepared to accept seller financing or now unwilling to accept it.
It is generally believed that business owners should be proactive not only in running their business but also in preparing to sell – possibly right from the day one. The reality is, however, somewhat different – most sales of business are driven by outside rather than inside causes, such as partnership problems, divorce, health, or just plain burnout pushes the business owner into selling. When this occurs, the seller may be caught by surprise by some of the unexpected issues that almost always occur.