AGBeat.com reported that entrepreneurs typically sell their businesses for one of three reasons: pursuing new endeavors, avoiding taxes and retirement. Randy Siller says a plan of action is important when selling for any of those reasons.
An article on AGBeat.com cites a third-quarter report from the International Business Brokers Association, Pepperdine’s business school as well as M&A Source with saying entrepreneurs typically sell their businesses for three reasons. Two are common while the third is a new issue.
The first may be simple, retirement. Many entrepreneurs get into business to make money and provide a steady lifestyle for their families. Once that’s achieved, many are content to lay back and enjoy a comfortable lifestyle. More than half of the business owners in the United States are so-called baby boomers, and are reaching retirement age.
The second reason has been seen before as well. Entrepreneurs, by nature, enjoy new endeavors. Some are finding they would rather take the profit from their big idea to help fund their other creative outlets. Others are ditching their businesses to avoid being burnt out on bigger projects.
The third reason is a new one: the concern over increased taxes. The report finds that businesses worth over $5 million have more to lose with new taxes in store for 2013. More than one-quarter of respondents in the survey said they may try to close a deal on their business to avoid suffering from the taxes.
Randy Siller, a co-founder of Siller & Cohen, says any business owner should have a plan to sell their business whether they intend to sell soon or not. Having a plan ready will not only help quicken the task, it’s also one of the easiest ways to figure out the true value of a company.
Randy Siller warns it could take as long as five years to find a suitable buyer for a business, so being prepared long before the deal is done is crucial. There are many different options to be considered, and Randy Siller suggests thinking them all over.
For example, it is important to iron out whether the business will be sold as a whole or in pieces. Selling one part of a business now and holding out on others until later can help the owner take advantage of tax breaks. Also, the owner needs to contemplate whether he or she wants to help during the transition period. This could be for months or years, but it may make the process easier by being a part of it. Also, an owner may get more for a company by taking payments over time instead of requiring one lump sum.
Randy Siller helps his clients and their families move forward in their goals of financial independence as well as both family and social legacy capital.