A great deal of blood, sweat, and tears no doubt went into establishing your business. After having put in all of that effort, selling it may be the last thing you would ever consider contemplating. Yet the truth is there are scenarios in which you could potentially find yourself where selling your company becomes your best option. It’s vital you know how to recognize these optimal opportunities to sell as they arise, and how to execute your plan in a way that’s most beneficial to you and the many stakeholders in your company.
Why Would You Sell?
Before beginning to understand when and how to sell a company, you should know one thing: there are always buyers. Large corporations are always on the lookout for rising startups in their sectors to acquire to help either retain or expand their own market shares. Even struggling or defunct companies can be attractive acquisition targets in the right circumstances. The point here is that you shouldn’t let the fear of not finding a buyer convince you to overlook good opportunities to sell your business when they arise.
Just what may those opportunities be? Here are just a few:
- Your passion lies in the development: For many, it’s the thrill of developing a concept or product and then overseeing the growth of it into a successful business that keeps them in engaged in the entrepreneurial market. If this describes you, then you should know there’s likely a point you’ll reach with your company where its management overtakes its growth. If overseeing the daily operations of your organization doesn’t excite you as much as building it up did, you owe it yourself and your stakeholders to turn that responsibility over to another party. This could potentially present the opportunity to make huge financial windfall for you, as well as to free you up to move on to your next challenge.
- Your current business model is not viable: Many startups thrive immediately after getting into their markets simply because they are new. However, over time, the cost of customer acquisition can become a major issue. The key to any successful company is making more than it costs to bring in new business. If you reach a tipping point in that regard, suddenly your future becomes uncertain. Yet that doesn’t mean your business needs to end; it simply requires an infusion of resources. Those often come from another company that has capital to spare. In this case, a sale may give you the chance to stay on as a managing partner, letting you continue to run your company with the assistance of another.
- Your ability to retain a high-quality team is limited: A business is only as good as those it has working to support it. The trouble with having a great team supporting your startup is that as larger competitors start to see your success, they begin to target your most talented subordinates to come and work for them. Often, you’re unable to replace these workers with professionals of the same caliber. If this is constantly happening to you, then you may want to sell your company rather than risk relying on lower-quality support to sustain your success.
Some Tips to Remember
Now that you know what some of the best opportunities to sale may be, here are few tips on how to go about it:
- Be prepared beforehand: Have all operational and financial kept current to help assist in a transition of ownership.
- Remember your responsibilities: Make sure your employees, investors, and other stakeholders are taken care of in the sale.
- Make the sale a team effort: Involve corporate lawyers, accountants, and financiers in the developing the details of the sale to ensure every aspect is properly addressed.
Selling your company is never any easy task to complete, even in those scenarios where you expect to make significant financial gains from the transaction. Understanding and accepting that there are actual situations where a sale is the right move will help to better prepare you to embrace it when the time arrives.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.