Personal Finance

Common Factors Why People Sell Their Business

In the competitive world of business, there are usually hundreds of transactions made each week. These transactions include acquisitions, management buyouts recapitalizations, leveraged buyouts and mergers. Corporations with million Canadian dollars are also involved in these transactions. What do you think are the reasons behind websites posting articles on why entrepreneurs sell a business ? Read on to know some of these points when planning to sell your business in Canada.

People Sell Their Business

Business Value

You should know the value of your business in the existing marketplace so you will know if selling it at certain time is viable. Consider getting your company into liquidity whenever you have an opportunity. Operating a business is actually risky and you will get more and hold on to it longer when your risk to failure is greater. There is no liquidity in a business unless you go through a selling transaction of a part of the whole company.

Tired of Business Risk

Entrepreneurs tend to be more confident in taking their risk during the early stages of their business. If you would want to grow your business beyond its initial stages, take every possible chance you have in the market. The value of your company grows and entrepreneurs become more conservative as their company grows with fear that there will be greater damage compared to the time when it is still developing. Older Canadian entrepreneurs tend to avoid risky situations like fixing bad strategies for damage control since they do not have enough time to do it.

Entrepreneurs need to find ways on how to exit their investment, making it a smart decision for their business.

Best Time to Change

The decision of business owners to sell their business because it’s the right time is not only the main reason though an opportunity for liquidity can be considered as a good factor. Corporate founders and CEOs may think of retirement after 15-20 years of spending their energy, resources and time in building the company. Another possibility may be the readiness of the owner for change and search for a new opportunity.

Buyer Motivation

Private equity is considered more suitable of quick engagement of the owner, evaluation of the business and completion of acquisition. Disputes among the family members can be a driver of acquisitions. However, incoming investors can prevent dysfunctional individuals and can restore excellent business management practices.

Sellers may plan to sell their business for strategic or operational purposes such as:

  • Finance for an expansion
  • Place for better management
  • Get market share
  • Diversify focused customer base
  • Increase capital for any acquisition
  • Secure for succession in leadership
  • Diversify service and product offerings

But before selling your business, you should note the following:

  • Timing of business sale
  • Looking for the right, best prospective buyers
  • Preparing your company for sale through the right technology, audited financials and good executive team

It is a smart idea to plan-out the exit of your company and prepare when there is a right timing so you can maximize the value of your company in Canada.