When it comes times for a business owner to sell their business there is usually a driving force behind it. Zoran Sarabaca, Founder of Xcllusive Business Sales took a look at his most recent clients to gain a better understanding of what is pushing business owners to sell.
The first question potential buyers ask when takes a business to the market is WHY? We humans are naturally suspicious so, when a business is successful and making money, we wonder why the owner is selling.
“And then we have the sellers, who aren’t always willing to disclose the real reason why they are putting the business on the market,” said Zoran, Founder of Xcllusive Business Sales.
“They are afraid that reason will be used against them in the buying/selling process.” Determined to get to the bottom of this dilemma, Zoran took a closer look at the 228 businesses Xcllusive Business Sales recently took to the market.
At nearly 38%, the main reason why people are currently selling their business is retirement. The next highest group is ‘Other business interests’.
“This one is interesting because often other business interests arise from the current business. For example, you may have several retail stores and then you start importing and realise that importing is better for you, so you sell your stores,” said Zoran Other reasons people sell their businesses include Relocation (11.4%), Family Commitment (9.6%), Health Issues (8.8%), Career Change (6.6%), Internal Business Issues (4.8%) and Lifestyle Change (3.5%).
“An internal business issue is something within the business causing you to sell. It could be that the business isn’t performing well, but it could also be a partnership split or disagreement, or the market has changed,” said Zoran.
Apart from retirement, the other reasons for selling are largely unplanned. Something happens in your life and you have to sell.
“Regardless if it is planned or not planned, should you disclose the real reason for selling the business? With retirement, it’s not a problem. They will tell you the reason. As well as getting a good price, this seller wants their legacy passed on, especially if they have run the business for many
With most of the other reasons for selling, the business owner may be reluctant to say, as they fear it could be used against them. For example, if they have already relocated or if they have health issues, a buyer may use that to beat down the price.
“I believe that no matter what your reason is, you should disclose it. If you try and hide it and the buyer finds out, the trust is broken, confidence falls off the cliff and the purchase may not go through,” said Zoran.
Revealing that you have a tight timeline for selling can actually work in your favour and you could end up with multiple buyers bidding for your business, he added.
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When it comes time to sell your business it is important you are prepared. Taking a look at similar businesses on the market is a great place to start, have a look at the current businesses for sale and search within your industry or area.