Different Ways to Sell a Business
Selling your business is a tough decision. It’s your hard work that went into creating it, making it work, and getting people to work for you. It becomes close to your heart, however, a time comes when a business can no longer remain yours, either it has to be passed on to the next generation or sold off. Because it’s not being profitable anymore, or there is too much competition, or the debts are too many and the incoming is not able to manage them, or the owner wants to get into a new line of business. This feels like a personal loss to any business owner. And not researching the best ways to sell a business or pass on adds to that loss. There are quite a few ways to sell a business depending what type it is and what resources you have:
Preferred by many businesses, liquidation is when all the assets of the business are sold to get the money. Liquidation is mostly considered as an option when the company needs to pay off the its debts and the money received from the liquidation is divided amongst the creditors, the employee salaries, and other such pending dues after which the business owner gets the amount that is left.
2. Fire Sale
An option chosen by those who want to sell their assets as soon as possible. The idea is to sell off everything at prices that are lesser than the ones in the market to make as many sales as possible. Here, the challenge is to get a decent negotiation on the prices and could sometimes lead to selling the assets in less than the desired prices.
3. Giving the business to Heirs
Some business owners opt to transfer their business to their heirs when they cannot manage it anymore and don’t want to shut it down. It is a good choice but they need to be careful of the laws around the transfer and also need to be sure that the heir who is given the responsibility can do justice to it and is accepted by the staff and clients.
4. Sell to key employees / ESOP
This is a good option when the business owner wants to generate some capital but does not want to lose the business. Here, certain employees are given stock options. This works well for the company as the morale is boosted and more people have a stake in the performance of the business. It has also been found that businesses where employees have a part like this do much better than those who don’t.
5. Sell to a third party
Selling your business to a third party may not sound like the best option but is actually is quite beneficial. If a business owner cannot find an heir to takeover, and knows that liquidation or a fire sale is either not possible or not beneficial, then this is the option that comes to the rescue. It is fast, and it ensures that the employees in the company will not have to be unemployed because the business was sold off, even though some may basis the decision of the new owners, most of them will still have jobs.
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: 6-5-2019