Alternatives to Selling Your Business

The choice to sell a business often arises from pressures beyond the owner's control. Family responsibilities, partner disputes, lagging prices and product or market shifts can all take a toll on a company and its owner. Selling the company outright, however, is not your only way out. Today, more than ever, there are a number of different options available to business owners who want to reduce their role but don't necessarily want leave the business entirely.

Seeking Investment in Your Business - Business Angels
A 'Business Angel' is a private investor who contributes:

• Financial Support
• Experience
• Expertise

to businesses with growth potential.

Business Angels, regardless of age, have capital, experience and expertise they are willing to invest. They normally want to buy into a small firm where they can benefit from a sound investment return, while also being able to play a part-time role in advising the business.

Most Business Angels find their prospective partners by chance or through previous business contacts, but BizSales aims to make the match more efficient, effective and right for you, by maintaining a list of opportunities where a Trade Sale is not suitable, but may suit a Business Angel.

BizSales will create the platform to introduce those who can and are willing to supply the right ingredients to those enterprises and entrepreneurs in need of such resources.

Going Public
The initial public offering (IPO) has garnered a lot of attention recently, and while many view it as an ultimate goal, it also can be a good alternative to selling off the firm. Going public, which entails offering company stock to the public on an open market, can raise large sums of capital that may have been out of reach for your company. But because each industry has different criteria for IPO success, be sure to first research the IPOs of similar-size companies in your field. Serious contenders should have a three-year track record characterized by accelerated growth. Ask yourself these questions: Do you have a good product and a good story? Do you have a market-driven reason to attract new capital? Can you partner with an underwriter?

As the owner, be aware that an IPO for your company will mean a significant loss of control. You will be accountable to outside investors, most of whom are in it for the money and do not share your passion for your company and its product. You will also encounter strict Securities and Exchange Commission regulations and record-reporting rules. As a result, once-confidential company information can become a matter of public record. In addition, the cost of going public can be steep (£100,000+), so it's definitely not the answer for a company that's looking for alternatives to bankruptcy.

Partial or full sale
You may want to sell the entire business. Sometimes the purchaser prefers you to retain partial ownership and continue to run the business. This can give the purchaser confidence that the business will do well.

Selling Corporate Assets
Many companies get into trouble when they bite off more than they can chew. Expanding or diversifying too quickly, buying unnecessary property, or absorbing smaller companies that turn out to be mismatches can all push once-successful firms toward failure. Though it's difficult to cut back or restructure into a smaller division of a field, sometimes it's the best alternative to selling the business outright.

You can sell assets such as equipment, intellectual property or your customer list rather than selling the business itself. This may be attractive to a purchaser who does not want to take on liabilities and obligations. For example the purchaser might not want to take on your employees. You will be left with whatever assets and liabilities are not included in the sale.

Before you decide to sell off part of your business, solicit an outside financial advisor to appraise your assets and determine a fair market price for each of the divisions you're considering selling. When choosing what assets to sell, it's a good idea to look first at assets that aren't directly tied to your core business. Also look at assets for which there is a strong market. This will ensure that you get the best possible price for those assets. There may be sticky issues involved in transferring the assets from a trust or company entity to an acquiring company, so be sure to obtain input from legal and accounting experts.

Senior Advising
The position of senior advisor or CEO emeritus may offer both a company and its founder a way to move smoothly through a difficult yet necessary transition. Perhaps a founding CEO needs a rest but hesitates to relinquish full control. Perhaps a sudden merger/acquisition or planned sale triggers a turnover in command, but the new owners value the benefit of retaining a veteran advisor. Advisory roles also offer a reluctant company owner a way to exit gracefully when it's time to retire, or if stricken with a sudden illness.

Succession Strategies
Privately held companies often make the mistake of neglecting to make succession-management plans. Failing to prepare the firm's next generation of leadership may stem from a lack of capable managers or lack of interested family members. Outsiders generally view the absence of a succession strategy as a company weakness. Failure to implement succession plans can dash a potential IPO, discourage a management buyout, and repel underwriters or institutional investors. In order to ensure a smooth transition, it is crucial for owners to establish succession strategies several years in advance. Family members and key employees are two good starting points when looking for potential successors.

Immediate or phased payment
You can ask for payment in full when the sale is completed, or you may be prepared to accept payment in instalments. The purchaser may well prefer to pay in instalments. But you will be at risk, for example if the purchaser cannot make future payments.

Your choices can affect whether buyers are interested and how much they are prepared to offer. They can also affect the tax treatment of the sale.

What if no-one want to buy my business ?