Ways to sell a business – 5. Selling To A Third Party
Is selling to a Third Party the Best Way to sell your business? Having to sell your business may be a decision made because you need to manage funds, or you plan to not continue it further, in any situation it is not an easy decision to make. Creating a business is not an easy task and the business owner knows how much they have put into the business to make it profitable.
To make it stand in the market and the thought of selling it off is not always the best idea even if it is in the interest of the business owner. Many options to sell out a business have provided business owners the choice and the decision-making power, and one of the top choices is selling the business to a third-party. Many business owners do not relish the idea of selling their business to a third-party. It is important to understand that the existence of the business is much better when it is being run by someone else, moreover so if the business owner cannot run the business anymore.
The benefits of selling a business to a third-party are:
- The sale brings in immediate money which helps in financial stability and a payout to the creditors. For this the business needs to be properly prepared for the sale, the owner needs to make sure that all the information and the paperwork for the business is in order and that it is evaluated the right way to make sure that the right value of the business in the current market is known
- Majority of the money from the sale comes to the business owner as there is lesser involvement of mediating parties, as would be the case in liquidation.
- The sale price of the business can be also appreciated based on the future potential and the revenue it could generate which is not the case when one sells it off in a fire sale or liquidate it, this way the business owner can also look at getting paid more than was expected
- The change in the work culture and methods of working could also benefit your business when you sell it to a third-party making it better for the employees who have worked in your business for a long time, so even though you may not be a part of it, you would not end up making all of them unemployed
- Sometimes options like liquidation or a fire sale may seem like better options because high emotions are expected in such a situation and even if the business owner wants to pass it on to his/her heir, a perfect fit may not be available, and in this situation it is essential to make a non-emotional decision for the better of the business you worked so hard for, and for your employees as the benefits of this option are not just for one, but for all.
ABOUT THE AUTHOR
Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 7-1-2019