The Challenge of Selling a Business – Why Businesses Don’t Sell
The Three Paths to Exit
- Close / Liquidate the Business
- Sell to a 3rd Party
- 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?
- Business is priced incorrectly
- Business is not properly prepared for sale
- 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.