Owning a business can be a fulfilling and lucrative endeavor, but at some point, every business owner will face the decision of whether or not to sell their company.
From a financial perspective, selling a business may not always make sense, as the potential for continued profits could outweigh the immediate payout.
Businesses are typically valued using multiples of earnings. Depending on a variety of factors this may run between 2x and 5x your annual Seller Discretionary Earnings (SDE). So if you continue to work then in a few short years you will have recouped what you would have sold your business for.
However, from a life perspective, there may be a time when selling a business is the right decision, as we all have limited time on this earth.
Here we examine the two perspectives and how to balance both to come to the right decision.
The Financial Perspective
- Selling a business can provide an immediate payout, but it may not be the most financially advantageous decision in the long term.
- By continuing to work and grow the business, the owner may be able to recoup the full price and even generate more profits in a few short years.
- Additionally, selling a business can have tax implications and other financial considerations that may need to be factored in.
The Life Perspective
- While the financial perspective is important, it’s crucial to also consider the human element.
- As humans, we all have limited time on this earth, and sometimes it’s necessary to prioritize personal goals and values over financial gain.
- For example, a business owner may want to retire, spend more time with family, pursue a new passion or simply enjoy life without the stress of running a business.
- Selling the business may be the best way to achieve these goals and improve overall quality of life.
Balancing Financial and Life Perspectives
- Ultimately, the decision to sell a business should be a careful balance between the financial and life perspectives.
- Business owners should consider their personal goals, financial needs, and the potential for continued growth and profits.
- It may be helpful to consult with financial and legal experts to fully understand the financial implications of selling the business.
- Ultimately, the decision should be one that aligns with the owner’s values, priorities, and long-term goals.
- Selling a business is a complex decision that requires careful consideration from both financial and personal perspectives.
- While it may not always make sense from a financial standpoint, it’s important to also consider the personal element and the limited time we all have on this earth.
- By finding a balance between these perspectives, business owners can make the best decision for themselves and their future.
The Author Anthony John Rigney is the founder and Broker of Quorum Business Advisors. Quorum is a Florida based Business Brokerage and mid-market M&A firm. For more Information you can contact Anthony here.