10 Reasons to sell a business

10 Reasons to sell a business

Tags: , ,

Sectors are in constant dynamism such as new technologies (3D printing or big data), new forms of logistics and changes in the habits of consumers. These are a few examples of disruptions that cause the need to look ahead for the sale of one’s business.

A businessman must be aware of his environment, its causes and effects in respect to its business’s framework, to not be hindered. One must be ready to reinvent themselves if possible, or be ready to sell in case of an unfavorable outcome. Listed will be warning signs of when it is time to sell.

1. Concentration in the sector: mergers and acquisitions represent, in most cases, the least costly route to modify, globally, the structure of a sector. There will be a concentration of providers and competitors and your business will be left without any scale and your leeway will continue to be minimized.

2. The appearance of new economic players with greater competitive capacities that will threaten the future of your business. These players tend to be from different geographic markets or products. In these cases, selling the company while it continues to be relevant could be a wiser choice than waiting until your competitor takes over your clients and the market.

3. Declining profit, due to having little to no products that were developed or distinct. Having a scarce amount of development is a clear reason to reflect upon a sale. The business is suffering a progressive deterioration of its balance. Many times instead of creating profit one is diminishing it.

4. Growth, in some cases is precisely the problem. When a company takes on a larger size that was not foreseen, it creates a conflict with management because the company was not prepared for it. It is prefered to sell off to a larger business or one with greater management capacities.

5. The need to internationalize or relocate the business (so it can be competitive), puts the owner in a tough situation, causes the owner to sell the business before the decline becomes greater. The businessman sees how relevant competitors are relocating to different countries and he cannot do it himself.

6. The loss of human capital: if one is having trouble hiring, working together or keeping a team that is running the business, these are signs that it is time to sell your business. At this point, the owner does not have the will or strength to try and make the business grow at a rate that is of interest of other external directors.

7. The loss of important clients: this can be a sign that one is losing competitive strength or that the company is in need of new ideas or new strategies.

8. Clients are doing vertical integration: they are buying from our competitors and they stop buying from your business.

9. The need for the incorporation of new resources: if one finds themselves seeking an amplification of capital to continue to be competitive. It is possible that the businessman, especially if they are near the end of their career, is not willing to re-invest in the assets that they have already generated and extracted from the business and prefers to let go as a whole.

10. Detach from unprofitable divisions, to the ones that can no longer receive more resources, that do not fit in to the company’s competitive strategy or that needs to be sold to obtain liquidity and sustain the main business.

Upon the narrowing of margens that cause companies to be liquidated with foreign companies, that are more competitive, for cost, size or investigation capacity, development or innovation, many businesses end up needing formulas to reduce costs via productive synergies with other similar companies to obtain market cuotas sufficient enough to generate economic scales.

 

In the last years, the change in velocity has accelerated the need to be quick to identify the right time to detach yourself from the business. The key is in acting before it is too late. Act now and make the right decision, you may need help from experienced advisors. Don’t hesitate to contact us for a strategic advisory!

CONTACT US

Artículos relacionados


Best retirement options for business owners: selling the company To retire off the back of selling one's company remains one of the quintessential dreams of any entrepreneur, but such an outcome does not simply arise from having a successful business. Some owners delay the process of succession until it’s too late...
The process of buying a business: due diligence The indicative offer has been placed and the letter of intent has been signed. The next steps are to confirm that, in fact, the business that we want to buy has all the characteristics that we believe it has. Everyone likes surprises, but not in the ...
The importance of a LOI when buying a business Surely you have heard of the expression “words are gone with the wind.” Keep this phrase in mind when you are planning your M&A strategy. You must understand that there is a great difference between a handshake with verbal agreement and a letter ...

There are no comments yet

Write a comment

SHARE THIS:

Most popular

Where is your buyer? ONEtoONE

Subscribe to our Newsletter:

We recommend:

Now is the Time to Sell Your Business

It may have taken you a lifetime or even generations to create substantial value for your business, but with the right planning and advice, it may take only a year or two to double that value. Succession issues, retirement, technology, globalism, scale, etc. are all viable reasons to be thinking about selling your business. But […]