Why Would Someone Sell A Profitable Business?

Odds are that when you began your business, selling it never crossed your mind. Unforeseeable situations that force the sale of a business unfortunately happen. These situations can come out of nowhere: a death, terminal illness, divorce or legal trouble. Those reasons are not usually publicly disclosed by the seller or their broker. Let’s discuss why owners should make strategic plans to sell a business that is successfully turning a profit.

Selling A Successful Company

Making the decision to sell your business is not an easy one. Knowing when to sell is even more difficult. Talk to any successful entrepreneur and they will advise you to sell when your company is on an upswing, when it is doing it’s best. Businesses that are doing well are much easier to sell than those that are struggling. Opting to maximize your profits when your company is at its height of success is a great strategy once you’ve decided it’ time to cash out to start a new venture or enter retirement.

Common Reasons Owners Sell When Business Is Thriving

We are all familiar with reasons for a forced sale such as health issues or divorce but have you considered why someone would sell when business is booming? Entrepreneurs sell their companies when it has a healthy valuation in order to maximize the price received from buyers. Here are several reasons why a person would put their company up for sale during the height of its success:

  • New business opportunity
  • Retirement and/or relocation
  • Burn out
  • Irrevocable partner issues
  • Maximize profitability

When Is The Right Time To Sell My Company?

There is no perfect formula for when the exact, right moment to sell is. Ideally, once there has been sustainable growth and profits, you can begin considering preparing your business to go on the market. If the economy is doing well and your respective industry is seeing an upward trend, it will be a sellers market with buyers lining up to make an offer. Businesses that are valued at a premium typically have a high Return on Investment (ROI) and low relative risk (be advised, no company is fool-proof) due to transparent financial records, a record of strong growth, and having a high percentage of repeat customers and a diversified yet growing customer base.

Have A Business Exit Strategy In Place Now

Savvy, experienced entrepreneurs start a new company or buy an existing business with an exit plan already in mind. While some entrepreneurs may want the business to remain in the family for the long haul, a plan for transitioning ownership is still necessary. Making your company name a legacy is admirable but selling when the time comes will pay out the most funds towards whatever your next endeavor is. Having an effective exit strategy can maximize the value of your sale. A documented plan is the best chance business owners have for finding the right buyer, getting top dollar and ensuring a smooth transition.

A Business Broker Can Help You Decide When It’s Time to Sell Your Business

Business brokers can guide you through the process of developing a solid exit strategy to minimize costly mistakes. They’’ll evaluate the worth of your business and advise you how to maximize your profits so you can get the most out of your sale. It is crucial that all of your business financials and legal documents are in order even before considering selling. Once you’ve made the final decision to sell, hiring a business broker not only ensures you’ll receive the highest price but they’ll also take care of the marketing, the sale itself and the hand-off to the new owner.

Give Martin a call today for a FREE business evaluation to prepare your exit strategy.

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