
Whenever you begin to think about selling a business, it’s important to figure out why you want to sell. That might mean getting a pile of money, freeing up time, or finding something more interesting to do. Understanding the “why” can help you make better strategic decisions regarding how to structure the sale.
Sometimes the answer is obvious. If you’ve been running the same business for 30 years, or if health- or age-related limitations make it harder to keep up with business demands, then retirement may be a big motivation. If so, your goals likely will be to maximize the value of the business – which may take several years of pre-sale planning – and to minimize the amount of seller financing to ensure a secure source of retirement assets.
But retirement is not the only scenario prompting a business sale. Some owners experience friction with a partner and don’t want to continue working together. Others get bored and want to start a new venture. That’s often the case with “serial” entrepreneurs, who move from one business to the next. And some owners simply want more free time to spend with families or pursue other activities such as extended travel or community service.
Regardless of your particular reason, it’s important for a seller to be able to present a plausible explanation when marketing the business to prospective buyers. Buyers want to perceive value in the business they are spending good money to acquire. It’s not too early to begin thinking about your reason(s) for a sale.
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