John H. Brown, author of How to Run Your Business so you can Leave it in Style illustrates the conflict between business owners expectations for the continuation of their businesses, and the reality of what actually happens.
Expectations Vs Reality
Expectations Reality
Transferred to family 50% 15%
Sold to employees 30% 5%
Sold to outsiders 10% 10%
Sold to competitors 10% 10%
100% 40%
From an address to the International Business Brokers Association
The above data substantiates that reality is in direct opposition to the expectations of the MassMutual survey participants. Although the overwhelming majority of business owners wish for their businesses to continue, most businesses will simply close down. The largest single reason that most businesses are not sold or transferred seems to be that the owners never made the decision to do so. If you do not make the decision to sell or select a successor, outside forces will eventually combine to determine the ultimate fate of your business. In defense of those who have not been able to come to a decision regarding business succession, we offer the following:
1.Business owners know they are missing important information in connection with selling.
2.To take action without a full understanding of the rules of the road would be foolhardy.
Most Businesses can be Sold
Our experience, gained in assisting more than 2,000 business owners with succession decisions and business transfers, indicates that essentially every business can be sold if:
1.Ownership fully understands the unique environment in which businesses are sold, and therefore avoids the costly mistakes of employing traditional sales methods to sell their business.
2.Ownership recognizes the natural cycle of business ownership (a time to grow and a time to go) and makes a timely decision and preparations to sell.
3.Those involved in the decision understand that the motivations to sell are personal and not purely financial.
4.The company is properly prepared for sale before marketing efforts begin.
5.The right buyer and the optimum price are identified before going to market.
Information Needed
The following are the questions most commonly asked when selling is considered:
Expectations Vs Reality
Expectations Reality
Transferred to family 50% 15%
Sold to employees 30% 5%
Sold to outsiders 10% 10%
Sold to competitors 10% 10%
100% 40%
From an address to the International Business Brokers Association
The above data substantiates that reality is in direct opposition to the expectations of the MassMutual survey participants. Although the overwhelming majority of business owners wish for their businesses to continue, most businesses will simply close down. The largest single reason that most businesses are not sold or transferred seems to be that the owners never made the decision to do so. If you do not make the decision to sell or select a successor, outside forces will eventually combine to determine the ultimate fate of your business. In defense of those who have not been able to come to a decision regarding business succession, we offer the following:
1.Business owners know they are missing important information in connection with selling.
2.To take action without a full understanding of the rules of the road would be foolhardy.
Most Businesses can be Sold
Our experience, gained in assisting more than 2,000 business owners with succession decisions and business transfers, indicates that essentially every business can be sold if:
1.Ownership fully understands the unique environment in which businesses are sold, and therefore avoids the costly mistakes of employing traditional sales methods to sell their business.
2.Ownership recognizes the natural cycle of business ownership (a time to grow and a time to go) and makes a timely decision and preparations to sell.
3.Those involved in the decision understand that the motivations to sell are personal and not purely financial.
4.The company is properly prepared for sale before marketing efforts begin.
5.The right buyer and the optimum price are identified before going to market.
Information Needed
The following are the questions most commonly asked when selling is considered:
- What is my business really worth?
- How can I find the right buyer and still maintain confidentiality?
- Are there steps I can take to increase my company's value?
- How long does it take to sell a business?
- Are there buyers out there with the money I want?
- Will I have to finance part of the sale? If so, how much?
- If I do, how can I be assured that I receive my money?
- What will I do after I sell?
- How much money would I have after the sale?
- What is an ESOP? Is it something I should consider?
- What would I do if I could not get my price?
- Perhaps a big company would buy my business. Would I have to stay on for long? Would they keep my employees?
- What expenses are involved in selling?
- What kind of investigation will a buyer want to perform?
Common Reasons for Sale
The reasons most often given for wanting to move on revolve around life-style issues such as:
The reasons most often given for wanting to move on revolve around life-style issues such as:
- Retirement
- Health considerations
- Relief from the burden of ownership
- Boredom with the business
- No time for the rest of my life
- Burned out, tired, need a rest
- Business demanding what I can't or don't want to provide
- It's not enjoyable anymore.
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