 1a) Reasons for Selling a Business When a buyer shows interest in your business, the first question they are likely to ask you is "why are you selling the business?" You should answer truthfully, as hiding the truth will only make things difficult for you later when the buyer finds out for himself. The most common reasons for selling a business are listed below: Lack of capital to fund the continued operations of the business The business is unprofitable Retirement Partnership disputes Lack of capital to fund the continued operations of the business The business is unprofitable Retirement Partnership disputes Family disputes Wanting to cash in whilst the business is successful Waning interest To raise capital to start/buy another business Death or illness of a key member of staff Generally too tired to run the business any longer
Once you have answered the question, how will it sound to the buyer? The important thing to remember is that you should not let a buyer know that you are desperate to sell (even if it is true) as it will be a major put off. Whatever reason you give, it will be no surprise that the buyer may have suspicions that you are hiding the truth, but this will always be a natural feeling for the buyer (just as you would when buying, say, second hand cars, etc).
To make yourself appear less desperate to sell, let the potential buyer feel as if you have an alternative to selling, say, passing the business onto your son: anything that will look as if not selling the business is the end of the world. 1b) When is the Best Time to Sell? The most favourable time to sell your business is when sales and profits are on the increase, as the sign of success will give buyers a bigger incentive to buy. At this time, your business is more likely to be valued higher than at any other time (particularly if your figures have been growing for a number of years). If your business has entered a state of declining sales and profits, you may have to rely on economical factors to help determine a better time to sell. Look out for falling interest rates as this is a time for investors to find a better alternative for getting a higher return on their money than they would from, say, a bank. Find out how easy it is to obtain finance and the expense of doing so. If it is easily accessible and cheap, potential buyers will see it as being the best time to buy: to your advantage. By recognising these fluctuations and opportunities in the economy, it will help you determine a good time to sell: but be careful as favourable conditions may suddenly change and may not become available too often. 1c) How Long Will it Take? There are no patterns or methods to estimate how long it will take to sell your business, as each business is different from the next. The National average for selling a business is around six months but this is based on a range between two months and two years.
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