5
Reasons Why Now Might Be The Right Time To Sell
Are you trying to time the sale of your business so that you
exit when both your business and the economy are peaking?
While your objective to build your company’s value is
admirable, here are five reasons why you may want to sell sooner than you might
think:
1. You
May Be Choking Your Business
When you start your business, you
have nothing to lose, so you risk it all on your idea. But as you grow, you
naturally become more conservative, because your business actually becomes
worth something. For many of us, our company is our largest asset,
so the idea of losing it on a new growth idea becomes less attractive. We
become more conservative and hinder our company’s growth.
2. Money
Is Cheap
We’re coming out of a period of ultra-low
interest rates. Financial buyers will likely borrow money to buy your business so—at
the risk of over simplifying a lot of MBA math—the less it costs them to
borrow, the more they will spend to buy your business.
3. Timing
Your Sale Is A Fool’s Errand
The costs of most financial assets are
correlated, which is to say that the value of your private business, real
estate and a Fortune 500 company’s stock all move in roughly the same
direction. They all laid an egg in 2009 and now they are all booming. The
problem is, you’ll have to do something with the money you make from the sale
of your company, which means you will likely buy into a new asset class at the
same frothy valuation as you are exiting out at.
4. Cybercrime
If you have moved your customer data
into the cloud, it is only a matter of time before you become the target of cybercrime.
Randy Ambrosie, the former CEO of 3Macs, a Montreal-based investment company
that manages $6 billion for wealthy Canadian families decided to sell in part
because he featured feared a cyber
attack. Ambrosie and his partners realized they had been under-investing in
technology for years, at a time when cybercrime was becoming more prevalent in
the financial services space. Ambrosie decided to sell his firm to Raymond
James because he realized the cost for staying ahead of hackers was becoming
too much to bear.
5. There Is No Corporate Ladder
In most occupations, the ambitious
must climb the ladder. Aspiring CEOs must methodically move up, stacking one
job on the next until they are ready for the top post. They have to put in the time,
play the right politics and succeed at each new assignment to be considered for
the next rung.
By choosing a career as an
entrepreneur, you get to skip the ladder entirely.
You can start a business, sell it, take a sabbatical and start another business
and nobody will miss you on the ladder. Your second (or third) business is
likely to be more successful than your first, so the sooner you sell your
existing business, the sooner you get to take a break and then start working on
your next.
*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq
