Part 5: Ways to get out of your business

I talked about Basil and Dan before.

But now let's see what they do when they think about selling their business:

Like I said, this is not a good way.

Basil will also realize it after 6-12 months.

But Dan already knows what options he has to be able to successfully exit his business.

Here there are:

Of course, the easiest way is to see if any member of your family is interested in taking over your business.

I am referring here mainly to son/daughter and son-in-law/daughter-in-law.

And if any of them are interested, the next step is to check to what extent he would (even if it is a daughter or daughter-in-law we will continue to use the masculine gender to facilitate understanding) be able to continue the business.

And if he is able to, you need to think seriously about your future and about the future of your life partner.

Why?

Because when selling a business to a family member, money rarely intervenes. And if sometimes a sale takes place, the price is much lower than the real value of the business. In addition, that price is usually paid in installments.

So there is a real risk of losing the business or giving it up "for nothing."

Think about why you started this business. To this question most of the entrepreneurs answered that they started the business to reach and then support a certain level of lifestyle and for the financial security that we all want. Well, they didn't use exactly those words. But that was the idea.

And now this very financial security and standard of living is endangered by the transfer of the business to a family member.

Some avoid this future problem by building another much simpler and more stable business in time, such as buying real estate and renting them. Thus, they can give up their basic business when they are a certain age and want to get out of it.

But it would be even better to sell the basic business at the best price and conditions, to keep some of the money to ensure your comfort and standard of living so that you never have to work again for the rest of your life (if the value of your business allows you to do so) and help your family members start a new business with the remaining money.

 

Sometimes these things are not possible for various reasons.

 

I met a very rich person. He told me at one point, "Who would have thought 40-50 years ago that a drunk DJ would get to this level?" He had several wives. He has a son of 35-40 years. But he leaves nothing of his fortune to him, but to a foundation. I was speechless. Then he added: “Everyone must carry his cross. It's me for him,” pointing to a picture of his son.

But some businesses simply cannot be sold.

These businesses are usually professional services run by a professional. Without him, the business has no real value.

But there are other normal, real businesses in this situation.

So the only way to gain something from their closure is through liquidation.

This does not mean just selling business assets or other goods that might be valuable to others at ridiculous prices.

It also means "squeezing" the profit of the business in the last 3-5 years before it closes. That is, you annually make a sum of money that you save and do not invest anything back into the business.

The transfer of a family member's business and its liquidation are used in about half of our business, in relatively equal proportions.

The other half consists of trying to sell the business.

It can be done to your own employees or to your management team - it is also called MBO from Management BuyOut - or to third parties.

We do this using several methods, depending on the specifics and size of the business.

Our most used method for businesses with a value of no more than 10 million Euros is to find buyers by contacting 20 investors monthly – as I already described.

Or we can contact 60 investors every month.

Even 100 investors.

For every 20 investors, we find on average one who is really interested in taking over your business.

But now is not the time to go into details.

The essential idea is that in 4-7 months we will find at least 4 investors (the average is 5-10 investors) interested in taking over your business, with whom you will be able to negotiate the details directly or to help you in this case as well.

You may be wondering if this approach to selling can be applied to any business ... The answer is yes.

I often say that any business can be sold if we can prove its value to a certain person.

SUMMARY:

  1. Basil will look for any solutions that do not cost him to sell his business. Unfortunately, they rarely succeed in this way.

  2. Dan knows he has only 3 big ways out of his business. He can do two of them himself. For the sale of the business, however, he turns to professionals.

  3. The easiest and most effective way to sell a business is to contact 20, 60, or even 100 investors a month.

16, Octavian Paler Street, Sanmartin, Romania 417495       ferilorincz@thetimetosell.com   |   0040-745-006-277

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