Reasons Why Businesses Are Sold By Owners
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Reasons Why Businesses Are Sold By Owners

Through the ages, we have seen businesses rise and fall.  I hear this a lot of times:  “I hope I have met you before I closed my business.  I was wishing someone else could continue but was really hopeless and I just closed it.   I have realized now that selling a business is an exit strategy.”  True!  Selling may be part of the business or all.  Selling may also be the assets only whether tangible or otherwise.  Following are the reasons why business brokers exist!

  1. Retirement or old age, no successor.  Mr. Business Founder started the business 30 years ago.  Daily, while the children were growing, Mr. Founder woke up to make sure that there is sufficient inventory, staff are present and cash sale were intact and deposited and a lot more things to monitor.  The children took on courses that will never educate them how to run a business like their father’s.  Then all the children complete their college.  One flies to another country for opportunities another one gets married and have children to grow and worked for other companies.  The other simply gets employed and eventually has become highly successful that income far exceeds that of the fathers business.  Then finally, Mr. Founder turns 80 years old and feeling week and asked the 3 children who would ever continue the business.  Mr. Founder finally decides on an exit strategy of just selling the business because the 3 children are no longer interested in the business that helped them grow.
  2. Migration or relocation.  In this scenario, Ms. Business Owner has had a long time dream of living in a foreign country, Canada!  Ms. Owner feels that Canada will be a good country to raise a family.  Ms. Owner’s desire to live in Canada is stronger than maintaining a profitable business.  So she finally decides for an exit strategy of selling the business.
  3. Stress, burn out or fatigue.  After five years of struggling to grow the business with the original vision of making it big and giving it all to the business, the owner finally feels so tired of the daily grind and would rather have other things to do that may be more calming or relaxing.  Selling is going to be the exit strategy.
  4. Health problems.  Seven years of running the business hurdling the stresses that it gives the owner.  Then finally, an illness has resulted because of the stress that the owner just allowed to happen.  Suddenly, the business owner can no longer attend to the business because he will need extreme medical care in a hospital facilty.
  5. Other business opportunities.  Some business groups have had too much in their plate that they need to unload a business in the group so as to support an initiative in another company that they feel will greatly help achieve more in terms of business enlargement ant profitability.
  6. Cashing in.  Business owner in this scenario suddenly becomes enchanted of just enjoying cash proceeds from the sale of the business while there is opportunity to do so.  After growing the business for 10 years, the business owner computes that cash can be raised five times that of the normalized EBITDA.  There are even a few, who have the resources who make setting up, growing and selling a business their business.
  7. Death of business owner.  A sudden death of the principal or key business owner has forced all the partners to just sell the business because they feel they can’t sustain with the death of the business’ prime mover.
  8. Conflict among owners or internal dispute.  The 5 business owners are of brilliant minds in their own fields before setting up the business. Hard headedness crept into the minds of 3 part business owners until it results to yelling and unprofessional like behaviour and discussions.  The 2 other partners are not used to the way business discussions are going.  Until they all just decided to sell the business because they feel  they can’t agree anymore in propelling the business to better profitability and sustainability.
  9. Seeking for lifestyle change.  There are business owners who have been in the day-to-day routine of tending their businesses until boredom has arrived and the owner suddenly wants something else. So to cope up, they decide to sell the business and do something else that is not necessarily a new business.
  10. Partial business sale and needs cash.  The business owners just feel that working capital is not available to spur the baby step business increases.  All the assets in use are still important and no other assets can be unloaded to convert to working capital.  The business owners finally  have decided to sell company shares to raise funds and to realize the expansions needed to sustain the business.
  11. Struggling and not profitable. A series of asset unloading, market innovation, piracy of excellent talent has brought not so impressive dent on the market and worst, impactful profitability.  The owners feel there is still something that can be done but the resources have been used up and realization says that the company be better managed by another party with the resources and capability to swing to a better business position.
  12. Buyer initiated.  This scenario is as simple as an external party, the buyer, has observed how reckless the business has been managed and felt the waste of time an energy in sustaining the business.  The buyer confidently feels that the business could achieve higher profitability and sustainability that is about ten times that of the present.  To propel the business to greater heights, the buyer offers to buy the business that the current owners can not resist! I even heard from someone: “Anything may be for sale! But at the right price!”
  13. Family pressure.  Siblings have been good at growing the business for the past years but have not thought of redundancy when one family member finally calls it quits! The remaining siblings were caught unprepared and need to catch up with speed to make sure the business is steered better until all would say we better sell the business before we are caught on the red.
  14. Turning chain stores into franchise stores.  This scenario is as simple as having the recognition to systematize everything at same time, document everything because the business can be replicated.  The owners want to enlarge the business and realize that franchising is the best alternative because it is all about using other people’s money but the impact to the growth is profound instead of just using internal resources to enlarge the business.
  15. Inability to compete.  All the business owners feel that competition has crept into their once best industry prominence and position.  They feel they have used up all their creative juices to push the company back to the once envious position of being number one.   Until they just decided to sell to competition so that no employees may be displaced.

Can you add more reasons?

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