Your Business: Fix It … or Sell It (part 2)

Your Business: Fix It … or Sell It?

Part 2

 OPTION TWO – SELL THE BUSINESS

If a business owner decides that there are too many problems to fix or fixing the business will take more time, effort and money than business owner is willing to invest, then selling the business is an option. Of course, if the business is damaged beyond repair, then closing the business may be the only logical option.

Distressed Sale: Different businesses have different assets. To some extent, all businesses have a variation of assets associated with administration, which often includes office furniture, computers, printer/copier,etc. A manufacturing firm will have production equipment whereas the primary assets of a service business can include its client list and supplier relationships. A distressed sale is often called a “selected asset sale.” When a business has significant existing problems, this type of sale is the best a business owner can hope for.

Optimal Value Sale: This is the type of business sale that all business owners hope for. The seller receives top dollar for the successful business venture. Depending on the structure of the Buy/Sell agreement, the former business owner could receive significant income in the form of seller financing and/or non-compete covenant value payout. Another post-sale income possibility is from being retained as a (post training and transition) full-time or part-time consultant.

The time frame for selling a business can be a few months to one or two years or longer. If a business owner seeks to have an optimal value sale, then it is necessary that business continue to be operated as successfully as possible throughout the time it takes to sell the business.

Conclusion

Making some decisions is never easy. Making business decisions can be much more difficult, given the often life-changing outcomes. The best business leaders seek knowledgeable advice before making certain decisions. When it comes to deciding whether to fix or selling a business, a consultant can provide worthy advice.

Posted in: Advice

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