Is it time to sell your business? Selling a company is an involved decision that requires much consideration. If you’re keen on the idea of selling outside of the family, your two best options are often selling to a larger company or selling to a private equity firm.
Selling to a competitor. Larger companies are often looking to acquire smaller companies in the same field. To them, that small company represents more customers, greater market presence and perhaps enhanced operations and technology.
Benefits
- Someone in your field understands your business and knows what it’s worth.
- A competitor has the most to gain from buying your company and might be willing to pay the highest value for it.
- You most likely wouldn’t need to keep working after the sale.
Drawbacks
- If the deal falls through, your competitor would know all the ins and outs of your organization.
- Depending on the agreement and the redundancy of staff, acquisition by a company in your industry might result in unemployment for many of your personnel.
Selling to a private equity firm. A sale to a private equity firm or a financial buyer means selling to an investor who will increase the value of your business and eventually sell it for a bigger profit.
Benefits
- A firm is less likely to disrupt your business and cause employee and client dissatisfaction.
- If you’re not ready to completely walk away from the company, financial buyers often allow you to stay involved.
- Financial buyers have access to people who can support your management team and add value to your company.
Drawbacks
- These firms typically seek a lower price, and seldom pay in cash.
- Because multiple lenders may be involved, these deals take longer to close and due diligence is extensive.
- A private equity firm’s primary interest is increasing the value of your business in order to sell it for a profit. Achieving this goal might mean substantial changes to your organization.
You’ve worked hard and built a successful business. If you’re thinking about selling it, go into the sale with clear expectations. The advisors at Boris Benic and Associates can offer you guidance before making this critical decision. Schedule an appointment with us now.