30 Jan What is the #1 Reason Why Business Owners Sell Their Company?
Deciding to sell your business can often be a very personal decision. After-all, as the owner, you’ve spent years of your life designing, building, nurturing and cultivating this entity. To understand exactly why business owners decide to go to market, Pepperdine Private Capital Markets Project (in conjunction with the International Business Brokers Association and M&A Source) analyzed data from its 2018 Q3 Market Pulse survey completed by business intermediaries, M&A advisors, and other business transaction professionals based on their recent deal experiences. Here’s what they found:
In the $5MM- $50MM deal range, the top 3 reasons that business owners sold their company were retirement, health, and recapitalization (in that order).
In the $2MM- $5MM deal range, the top 3 reasons that business owners sold their company were retirement (#1) followed by new opportunity and burnout (in a tie).
In the $1MM- $2MM deal range, the top 3 reasons that business owners sold their company were retirement, new opportunity, and health (in that order).
In the $500K- $1MM deal range, the top 3 reasons that business owners sold their company were retirement, burnout, and family reasons (in that order).
Finally, for deals less than $500K, the top 3 reasons that business owners sold their company were retirement, burnout, and new opportunity (in that order).
At a glance, the reasons why a business owner decides to sell may seem rather varied. However, when broken down into deal size ranges, trends emerge. What is the ultimate trend? Regardless of deal size, the number one reason why business owners sell their company is retirement.
Most business owners will need to sell their business to fully fund their retirement plans. 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.
To gain insight on these and other current market conditions, contact Kyle Griffith of The NYBB Group. The NYBB Group can be a resource to help business owners determine the marketability and approximate value of their business.
If you would like to discuss this article or schedule a private and complementary consultation, please contact Kyle at firstname.lastname@example.org or 631-339-0249.