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Top 7 Reasons Why Businesses are Sold

Posted by webtech on July 6, 2010
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When you’re faced with an interested buyer, you ought to be prepared to answer the most obvious question: “why are you selling your business?”  Whatever the reason maybe, in most cases, it’s best to be truthful.  If the buyer later finds out it’s actually a different reason, it will most likely ward them off.  So, honesty is key.  Here are the top 7 reasons (in no particular order) why people sell their businesses:
business-buyer-and-seller-discussion

1. “I’m ready to try new things”

Maybe an owner has been doing nothing else but working on his business for 30 years, and decides that it’s not too late to do something else: venture into other markets, pursue a hobby, etc.  This happens to be a wonderful opportunity for the buyer, especially if the business is successful.

2. “I’m just plain tired”

Perhaps the business is too dependent on the hard work of the owner, and there is no way to relieve him/her of the hefty work load.  It’s crucial that the buyer understand what their responsibilities might be as owner of the business, and that they don’t set themselves up for disaster.

3. “I’m getting too old for this”

With the baby boomer generation approaching retirement, the thought is that there will be a large increase in the supply of businesses for sale.  This means lower business-for-sale transactions for the buyer.

4. “It’s not enjoyable anymore”

Sure, work isn’t always supposed to be fun, but with all of the effort that goes into owning a company, chances are, the business probably started because the owner was passionate about it.  At the end of the day, if the owner can honestly say that they don’t love the work they do anymore, this is an understandable reason to sell.

5. “The economy is booming”

Business owners do best when they have a strong track record of cash flows, and the prospects for the business to continue to do well in the future.  With a good economy, prospective buyers often get excited and unrealistic about the future prospects for a business, and in turn, overpay. Selling business owners know this, and that’s why you’ll see more business-for-sale activity in a booming market, than in a down one.

6. “It’s time to cash out”

If an owner’s company is rolling in dough, the urge to sell it in exchange for a cruise around the world and lots of time on the golf course, is extremely tempting.  With this new financial freedom the owner might decide to pursue more important things in life, like family and friends.

7. “The business has reached it’s peak under my hand”

Many times, a business owner looking to sell knows that the company’s performance over the last few years will just not cut it any longer.  Maybe the market is changing in a way that will make the business’ products or services less desirable or no longer needed.  Perhaps, the business owner doesn’t have the winning strategy to move the business forward that the buyer might.

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