There are many reasons why successful entrepreneurs try to let go of their “baby”. The reasons may be lack of time, excessive stress, a desire to do something else, or simply that the entrepreneur is tired of running the company. If the latter is thriving, there is no reason to quit the business altogether. Rather, it is in their best interest to sell the company. What are the methods and precautions?
The sale of small and medium-sized businesses is no longer unusual. In the Czech Republic, hundreds to thousands of small businesses are sold every year. [There are several ways to sell a company. Basically, there are two ways: entrepreneurs can search for a business themselves and then sell it, or they can use consultants or intermediaries. The latter method is preferable when the sale is urgent. This is because the intermediary already has several important investors who can offer the business. In addition, the intermediary can negotiate a better price, which is related to the large number of interested parties. Of course, these services are costly, which can be a disadvantage, especially for smaller businesses.
The sale to the self-employed is carried out through a special contract for the sale of the business. This guarantees the transfer of the tangible as well as intangible assets of the business, all debts and liabilities, employee relations, and trademark rights.
There are several options with respect to businesses. The most commonly utilized is the transfer of business stock or shares, which results in the buyer promptly joining along with all rights associated with the company being sold.
The most important parameter is the price demanded for the business. This is influenced by many factors, including the condition of the business, the quality of its employees, its profitability, and the nature of its business. Valuation itself is a very demanding activity and requires a lot of economic and analytical data to know.
In addition, divestiture involves many risks. Many of these are information leaks, which could harm the company and reduce its value if customers, suppliers, or employees learn of the sale\’s intentions. The sale itself may also lead to misuse of confidential information by “prospective” investors (usually direct competitors).