Why Are Business Owners Selling Their Companies?
The Q3 2018 Market Pulse Survey Report indicates that retirement continues to lead as the number one reason for selling a company (52% for companies valued at $1M-$2M, and 56% for those valued at $2M-$5M).
Because a business often represents up to 70% percent of the owner’s overall wealth, it is critical that they take a proactive approach when preparing for their exit. Owners who succeed in harvesting years of hard work will not only financially benefit them on a personal level, but they will have more wealth to pass on to their families.
Earlier this year, the Market Pulse Survey Report indicated that business owners who sold their business for $2M to $5M preplanned at twice the rate of business owners selling in the $1M to $2M range. Proactive planning is important and the better prepared an owner is, the better results they will experience. Yet studies show that 60% of business owners who did not pre-plan were unable to sell their business for their expected value, bringing truth to the adage those who fail to plan, plan to fail.
To start planning, determine how much money you will need to receive for your business to be able to live the life you want afterward. Think about these questions: What do I have now, and what do I need? Most people do not have their “number” figured out, but with a little work, you can get there quickly. Get some professional help from a wealth manager or financial planner to fine-tune that number.
We are here to help when you need to determine the marketability and approximate value of your business. Click the button below to take our free Business Value Assessment Test to determine the current value of your business.