Founding a company is not an easy task, and so is selling it. The reasons for selling can be varied from family issues, partner disputes, pricing, low ROI, market shifts, and much more. No matter what the reason is selling your business is do consider all alternatives that you can have. There are multiple alternatives for business owners who want to sell their business.
Here are some of those alternatives:
- Go public
- Sell corporate assets
- Succession strategies
- Invest more
Going public (IPO) has attracted a lot of attention lately, and while many see it as the ultimate goal, it can also be a good alternative to selling the company. IPO, which is the offering of company stock to the public in an open market, can raise large sums of capital that may have been unaffordable for your company to have similarly sized companies in your area before proceeding.
Serious competitors should have a three-year track record of accelerated growth. As an owner, be aware that an IPO means a significant loss of control for your company. You are accountable to outside investors, most of whom are in it for the money and don’t share your passion for the company and its product. You will also encounter strict Securities and Exchange Commission regulations and reporting requirements. As a result, once confidential company information can become public knowledge. Additionally, the cost of going public can be high, so this is definitely not the answer for a company looking for alternatives to bankruptcy.
Sell Corporate Assets
Before deciding to sell any part of your business, ask an outside financial advisor to value your assets and determine a fair market price for each of the businesses you wish to sell. It’s a good idea to first look for assets that aren’t directly related to your core business. Also, look out for assets for which there is a strong market. This ensures that you are getting the best possible price for these assets. The transfer of assets from a trust or company to an absorbing company can involve complex and delicate issues. Therefore, be sure to seek the advice of legal and accounting experts.
Failure to prepare the company for the next generation of leaders may be due to a lack of capable managers or a lack of interested family members. Outsiders generally view the lack of a succession strategy as a company weakness. Failure to implement succession plans can derail a potential IPO, discourage a management buyout, and deter underwriters or institutional investors.
To ensure a smooth transition, it is crucial for owners to establish succession strategies several years in advance. Core employees and family members are always good choices for succeeding in a business than outsiders.
If a company is worth selling, it has to be profitable. If it is profitable, these profits should be invested wisely. By reinvesting your profits into other cash-generating projects, you can increase your returns. Moving forward, you might also consider investing through angel investments or syndicates in other companies where strong returns could bring the benefits that a sale would have brought. Your risk is spread, your future pay-out can be high, and you maximize your chance of freeing up your time in the future should one of your investments pay off.
Selling your business for any random reason is not fine. First, find out the real reason for selling. Second, try to solve the issue with the maximum capabilities. Ensure that you can end up in a strong position for furthering any future endeavors too.