If you are contemplating selling your business, there are many options available to you. The decision to sell a company that you have built from the ground up may not be the easiest to come by, but people decide to sell for many different reasons. Whatever your reason for wanting to sell is, there are options for making it the “right” type of sale for you. Here are four different sale possibilities that are common in the small business world.
Sell to a Financial Buyer
Otherwise known as a long-term investor, this type of buyer is interested in continuing the success of your company and will typically only buy companies that are already profitable and successful. A financial buyer is going to try to maximize your business and gain as high of a return as possible when they in turn sell, which is their ultimate goal. The benefit of selling to a long-term investor is you will likely get a great price for your company because they have the existing capital to make big buy-outs. A downfall with long-term investors is that you can lose the “homegrown” feel that may have made your business great in the beginning.
Sell to Existing Staff
An individual in your management team can be an ideal candidate for purchasing the company if they are a willing party. Existing management already knows the business and have likely been around long enough to share some of the same emotional investment as you so which can be an important element when considering a sale. A possible downside to this option is that your management team may not be able to afford your target selling price.
Sell to a Strategic Buyer
Strategic buyers differ from financial buyers in that they are more interested in making your company fit into their own business plans. They will seek out companies that fit their business model and purchase them to in order to enhance their own interests. Strategic buyers are a great option for selling because you know your company continue to build on its core strengths. You will also likely get a good purchase price as strategic buyers are known for their big payouts. A possible downside is the chance your company could be acquired and amalgamated into an existing company, eliminating your brand name.
For people who wish to step aside from the daily ongoings but not be completely removed from the business, the best option is partial recapitalization. This allows for the owner to sell either a controlling or a minority number of shares to a buyer while still retaining some equity, depending on the level of involvement the owner wishes to maintain. This is a newer strategy being applied to smaller businesses and it is beneficial for owners who are not fully ready to step away.
If the time is approaching where the sale of your business is the next logical step, make an appointment with your financial advisor at The Beacon Group of Assante Financial Management Ltd. to assist you with preparing the right sale method for your business.