Selling a company – either in part or as a whole – is a common practice among entrepreneurs. And while this is generally acceptable, some owners tend to hold on to their companies due to a number of reasons. These include attachment or sentimentality, lack of time to plan an exit, and the lack of knowledge about the process of selling a business.
If you are one those entrepreneurs who are thinking twice because of at least one reason stated above, read on some things that urged other CEOs to cash out their revenues:
The Seven D’s
According to Guy Beaudry of STS Capital, a business owner tends to think about selling his or her business whenever he or she encounters one or more of the infamous “D’s” in entrepreneurship. These are:
- Disenchantment;
- Disability;
- Disagreement;
- Disintermediation;
- Debt;
- Death;
- Divorce; and
- Disease
If you have at least one of these D’s and you feel that you cannot manage it without letting go of your company, then it is better for you to schedule a meeting with your most trusted advisors and explore the possible things that you can do.
Private Equity Investments
In recent months, it became apparent that there is an increase in the amount of available capital in the market. Most of these are from private equity groups that invest in promising companies to gain significant, if not complete, control of the businesses. Once in control, these groups will use its resources to improve the revenues of the companies and sell it at a higher price after a few years.
Many entrepreneurs are enticed to strike a deal with private equity groups because of the promise of huge profits. Before signing an agreement, however, remember that improperly handled private equity investments could also lead to disastrous results.
International Investments
Aside from investments from local private equity groups, there is also an increase in the number of Asians – mostly Japanese and Chinese – who want to invest in companies in the United States. Various articles show that the available amount of money from international investments ranges from about USD75 to 100 million. So if you are planning to cash out your revenues, then you might want to consider the huge amounts of capital that could come from Asian investments.
Current Market Status
Finally, a number of CEOs said that they have decided to sell their companies after a thorough observation of the status of the current market. There are three situations that usually signal owners that it is time to divest their revenues. These are: 1) the market of the business is getting a lot of attention; 2) the company is expanding and posting modest revenues; and 3) the company is having a hard time expanding.
If you think that your business is experiencing one of these situations, then – like in the first reason – it might be advisable to talk to your most trusted advisors.
The Next Question
Once you have decided to cash out your revenues, the next thing that you have to ask yourself is whether or not you want to leave your company. Some owners do not mind staying as an employee in the company that they have started. Others, however, find this kind of set-up unacceptable.
In the end, it’s your choice. Do you want to stay for a year or so in the company, or do you want to immediately retire or move on to your next venture? It’s up to you.
More detailed information and useful advice can be found at Funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
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