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Every business owner has a favourite reason for not selling. Whether it’s “I’m gonna live forever!” “I don’t want to face what it’s not worth,” or even “There are plenty of interested buyers—I get calls all the time!” We’ve heard them all. Here’s our analysis.

  1. I want to continue not going fishing every chance I get. Some business owners are just having too much fun. They, in fact, are having so much fun not selling their businesses that they don’t ever want to stop not selling them. You might even be surprised to learn that “not-for-sale” sellers are acquired all the time by strategic buyers that see more value in their businesses than they do.
  2. I am waiting ‘til the business peaks again. Congratulations, but you’re already too late! It will take six months to create a selling document and eliminate the tire kickers. It will take another six months to negotiate with the first serious buyers and another six months to complete negotiations with the final buyer. That adds up to a year and a half. Remember that a positive outlook will drive your earn out or protect your position. Now we are talking three-and-a-half years (very likely at a minimum). Make no mistake, acquirers buy future earnings.
  3. I’m getting ready to get ready. You’re right. You’re building a longer growth history that should be of value. It’s important to the buyer, especially when you don’t have it. But once you have established that strong sales history, your company’s future will be discounted in some other way—your company’s future always will be discounted on one basis or another—too often, quite drastically and unexpectedly, on the basis of circumstances you never anticipated.
  4. I don’t know where to better invest the proceeds. Few can be sure of where to invest their money in these times, but one thing is certain: were you to sell, no one could possibly convince you to invest the entire proceeds in a medium-sized, privately-held business, even if you were offered the titles of Chairman and CEO. Like you are now.
  5. I’m waiting for the kids’ IQ to improve. Well, there are lots of people holding out hope on that one. It certainly is most admirable wanting to eventually entrust your retirement to the hands of your children rather than dispassionate pubic company business executives who are expert in the management of corporate assets.
  6. I can’t spare the time. It does take a lot of time to manage the sale of a company, especially when the seller is dealing directly with the buyer. The best route is working with a professional M&A firm, this allows you to take advantage inherent in an auction process in which several prospective buyers compete to acquire you, the seller.

This process enables sellers to evaluate each suitor’s relative seriousness even as the competitive process ensures that each buyer offers maximum value.

  1. There are plenty of interested buyers: I get calls all the time…Buyers begin to disappear from the market altogether as interest rates make acquisitions more and more prohibitive. Strategic buyers come and go very quickly as do the perfect selling opportunities.
  2. I don’t want to face what it’s not worth. Value is in the eye of the beholder, and the best value is realized when you make sure you’re talking to the right buyers.
  3. I’m gonna live forever. Besides, you’re riding a winning streak, and every gambler’s motto is: “Cash in later.” The plain truth is that few of us will know when we will be called to cash in. You don’t want that burden to fall on those left behind. Expecting a widow or children to manage the selling process from scratch invites disaster. Your heirs will be pegged as “desperate” sellers by every suitor, and the longer it takes to close a transaction, the worse things will become.
  4. I’m waiting to lose a few more options: I always do best when I’m under pressure. If you’re market share is slipping, your product line needs updating, key personnel are leaving, key customers are defecting to competitors, revenues and/or profits are declining, and your market is disappearing, what are you waiting for? Do you want to see your business model completely invalidated?

Ninety-nine percent of all entrepreneurs hold on too long and sell their businesses three to five years too late. They postpone the inevitable decision until they find themselves trapped by “must sell” circumstances.

While some might consider the analogy unflattering, business owners all too often fall victim to an unwillingness to let go at the appropriate time. Business owners recognize the critical importance of timing even as they admit to postponing the process, perpetuating delays even as they seem powerless to know when to let go and escape the inevitable trap. Sooner or later, the executives recognize the true price of their reticence: Someone else winds up making their estate planning decisions.

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