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Selling Your Business — What’s the Reason?

There was a study done, years ago, that showed that the reason businesses were for sale had a direct relationship to its probability of sale.

Reason for Sale %Reason for Sale %Probability of Sale
Retirement 10-15% 30-35%
Health Problems/Death 15-20% 25-30%
Partnership & Family
Problems/ Divorce
5-10% 15-20%
Burnout/Other Business
Investments
15-20% 15-20%
Under-capitalization 20-25% 10-15%
Insufficient Profits 20-25% 5-10%
Profit Motivated Only 5-10% 0-5%

The above results point out the more serious or valid reason for sale, the higher likelihood that the business will sell. Despite its age the results today would probably be more dramatic. Most of those looking for a business to purchase in today’s market would shy away from businesses that are under-capitalized, showing insufficient profits or any in which the seller was just attempting to sell for profit only. Today’s buyer is better educated, has more knowledge about business and is more wary than his or her predecessor. The financial records better be complete, all information available – and the seller must have a valid reason for sale.

It is evident from the results above that such reasons for sale as: retirement, health issues, family problems followed by “burnout” have the highest probability of sale. Burnout is not a new issue, but it is generally preceded by many years of doing the same thing. It’s difficult to accept burnout from a seller who has been in business for only a short time.

There is an old saying among business brokers and that is that it takes a willing seller – and a willing buyer to complete a successful sale. The moral of all this is that the more valid the reason for sale, the better the chance the business will sell quickly – and without undue problems.

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