The Challenge of Selling a Business – Why Businesses Don’t Sell

The Challenge of Selling a Business – Why Businesses Don’t Sell

The Three Paths to Exit

  1. Close / Liquidate the Business
  2. Sell to a 3rd Party
  3. Pass the Business to a Family Member – Only 17% of Business are passed to the next generation

The Baby Boomer “Tidal Wave”

  • 7 out of 10 businesses will be for sale in the next 10 years
  • Largest transfer of privately owned businesses in U.S. History
  • Inc Magazine – “An estimated 65 -75% of small businesses will go up for sale in the next 5 to 10 years! Why? Retiring Baby Boomers.

Most Businesses Never Sell – What are the odds of selling?

Annual Revenues $ Success Rate

Below 750,000                                          1 out of 5.5                  18%

750,000  – 2,000,000                           1 out of 4                      25%

2,000,000  -  6,000,000                      1 out of 3.5                  35%

50,000,000 +                                           1 out of 1                     100%

  • Inc. Magazine – “Historically only one-quarter to one-third of all private companies ever manage to find a buyer.”

Why the high failure rate?

  1. Business is priced incorrectly
  2. Business is not properly prepared for sale
  3. Insufficient market exposure

Key Factors to Successfully Sell a Business

  • Provide the buyer with a fair market salary
  • Fund capital expenditures required to maintain historic revenues
  • Provide a reasonable return on investment
  • Service acquisition debt in 3 -5 years

Please Note:  The Business Wealth Preservation Group is not a business broker.  The foregoing information is to provide you with information, knowledge, and an understanding of the obstacles, issues, and opportunities for selling your business.  We can recommend a broker from our list of preferred providers.  Please call us with questions.

Copyright 2010 The Business Wealth Preservation Group, LLC.