business
TIME TO SELL MY BUSINESS?
There is a time when a successful entrepreneur wishes to sell his successful venture. Is there a specific time for this to happen?
T
his question leads to a number of further questions which could lead on to some interesting answers: How should all this be structured? Why should a successful entrepreneur sell his company? At what price should his company be sold? Is selling a successful business the best way forward for a seasoned entrepreneur? First and foremost, we should bear in mind that there are several reasons for selling a company and some very important factors that make a future sale feasible. The first factor may very well be that the company owners wish to cash their chips and move on to a new project. This normally happens when the age of the company owners and timing is right. There is no specific age frame, but it is wise to move forward if you are well below retirement age in order to have a good amount of time to start another company, or even easier to buy an existing company and improve it. 20
Green fields can be very successful but there is an element of risk to be accounted and very hard work as well. Whereas an existing company could be a much better option because of a number of reasons; owners wanting to retire who are perhaps not as energetic with a lot of room for future expansion without all the drawbacks of a start-up venture.
In business, nothing has to be forever. An example that comes to my mind was the job that Pizza Express did in Spain in the early part of this century. They bought a small chain of restaurants of just under half a dozen units. They paid important money for them but not a huge amount. The owner wanted out. He was getting on and had important loans with several banks and could not see an interesting future ahead. In addition, his children were not keen to continue building the company.
Before the sale took place, they had a franchise project in mind and several other good ideas. The British Pizza Express group took it over, paid the owner the right money and started rebuilding the company. In less than 3 years the chain went from 5 units to over 25 and kept growing. Their annual turnover soared and their profits went up considerably. The owner of the small hospitality group cleared his banking debt and had sufficient capital to build a solid property portfolio which at present yields a good rate of return via rentals of both residential and commercial property. On the other hand, the chain of restaurants continued to grow until it was sold to an offshore Japanese hedge fund. In business, nothing has to be forever. This applies to ownership. Not even in the oldest and most prestigious of companies stay always in the same hands. Indeed, the companies can remain active for generations but more often than not ownership does change hands. Another very strong reason to sell is the age factor. When an entrepreneur reaches his retirement age, he probably wants GIBRALTAR MAGAZINE OCTOBER 2020
