Invariably, the first question I get asked by the potential buyer of a business is, “Why are the owners selling?” That question is driven by a natural concern that there might be something wrong with the business, “If it’s such a good business, why do they want to sell?”
I obtain a no-holds barred view of a business so I can evaluate its worth before presenting it to the market. For every business I’ve presented for sale, there are unexplored opportunities.
For the sellers, sometimes those opportunities are unexplored simply due to a lack of available time. I’ve not met anyone who has pulled the wool over my eyes and successfully offered a dud business as a pot of gold. I formulate
an in-depth sales document on every business I present; profit, warts, and all. Here are the top reasons why my clients have wanted to sell:
Retirement – the seller is close to or past retirement age. They want more time for themselves or time with
family and grand kids.
■ Simpler life – the seller is not retiring but has other priorities and something must give. Some sellers lose interest in staff management and business administration, yearning instead for simplicity.
■ Lost the oompf – the owner has lost passion for the business or industry, often developing a greater interest in a different industry or in an adjacent industry.
■ Realising the business’ value – some people are serial entrepreneurs. They love the set-up phase. They get a great idea and once the business
is past the start-up phase and is generating income, they are thinking about the next big idea and want to sell so they can generate value from the investment.
■ Relocation or Health – selling for health or logistical reasons is becoming more prevalent for ageing baby boomers. Some people just want to hit the road in their caravan. What about buyers? The main reasons I’ve encountered for purchasing a business are:
■ Competitor buy – a competitor in the same market wants to vertically integrate a business into an aligning sector.
■ Wages to business owner – you’ve probably heard of “The Great Resignation”, a trend towards self-determination. More and more people are deciding that if they are going to put in long hours, they may as well ensure that profits go in their own pocket.
■ Buying an income/investing – I’ve met several buyers, particularly in the last three years, who have relocated back to NZ and are seeking a higher return on their funds than traditional investments.
■ Repeat buyer – buyers who have previously owned and sold businesses and are coming back into the market and looking for new opportunities.