At some point, most business owners have to step away from their empire and “relinquish the crown”. Letting go of a business outside of your own terms often leads to feelings of regret that could easily have been avoided.
It’s never too early to think about selling your business for its maximum value. However, knowing exactly when to sell at any point in time can seem like a daunting decision. Any trusted M&A advisor will tell you that selling when you have a valuable asset is a smart choice, but there are also other signs that point to the start of the M&A process. Here are four of the most common reasons business owners decide to sell in the middle-market.
1. It’s Time to Sell Your Business if You’ve Lost Interest in Taking Risks
The early stages of business ownership often come with lots of risk-taking that hopefully results in the growth of the brand. When risks pay off for a business, the value of the company grows over time.
As value grows, conservative action often sets in. Once owners have moved beyond the startup phase and into some success, many just don’t want risk damaging the value that’s been built up over the years.
If you’re an older owner and have grown tired of risky business strategies, now may be the time to start thinking about an exit while you’re on top. Take advantage of your success and cash-in before time naturally devalues what you’ve built up.
2. You See Your Industry on its Way Out
Unfortunately, time guarantees that trends change and eventually, industries are pushed out of favor. As a middle-market business owner, it’s your responsibility to keep up with the times and understand when a shift in the market could mean the decline of your brand.
With the current growth of technological trends slowly phasing out services like hotels, taxis, and B2C sectors, it’s evident that no industry can truly escape the oncoming shift. Keep your eyes open for the trends and take action before your window of opportunity to sell closes.
3. Your Business Upkeep Has Become Too Expensive
Large capital requirements to maintain a competitive position in the market can be daunting for any business owner. However, if you’ve been in business for years and find that it’s become difficult to bring the energy and intensity required to grow, it may be time to sell. If you’re at or near your goal retirement age, think about putting the sell-side process into action and negotiating the sale of your business in exchange for a comfortable retirement.
4. A Large Company Recently Acquired the Competition
This is never a good sign for the future of a middle-market owner. Even though your business may be valuable in your eyes, it’s time to look at the situation objectively when a national company swoops in and starts picking up the competition. If you see this happen in your industry, reach out to an investment banker who can help you make the right moves towards walking away from an M&A transaction with a sum that truly symbolizes your life’s work for your business.
Is it Time to Sell Your Business? Kratos Capital can Help You Figure it Out!
One of the hardest decisions a business owner has to make is when to step down and sell their business. If you find yourself relating to any of the aforementioned signs, then it may be time to reach out to an M&A advisor.
Kratos Capital, LLC is a Dallas-based middle-market M&A firm that has participated in hundreds of successful sell-side transactions. We have experience across several industries and are ready to learn about how we can help you. Contact us today to get the sale process started!