Buying a Business?--Why Sellers Sell their Business.

Posted by: Fernando Simo in Business Valuation on Apr 15, 2010

Tagged in: Untagged 


Recently, I was having a meeting with one of my network colleagues. During our conversation, she pointed out how leery she was of businesses for sale. When I asked why, she indicated that if the seller wants to sell the business is because it is not doing well. I found her response interesting and immediately indicated to her that sellers sell for a variety of reasons, most of which are not related to poor performance, cash flow or profitability issues. Here are ten (10) other reasons:
1.                  Health. The seller may no longer be capable of running the business because of health restrictions.
2.                  Retirement. The seller wants to enjoy his/her golden years.
3.                  Relocation. Wants to go back to or move to a preferred location.
4.                  Family. Wants to be closed and/or misses family members. 
5.                  Job. The seller’s significant other gets an opportunity somewhere else or the seller found a job which generates more cash flow than the business.
6.                  Profitability. The seller wants to cash-in on his investment. This may be a planned or unplanned exit strategy.
7.                  Business Demands. The business demands may be too much to bear—restricting the seller’s personal enjoyment and relaxation.
8.                  Other Business Interests. Other opportunities may be more profitable than the existing business.
9.                  Taxes. It may be to the seller’s benefit to sell the business for tax purposes.
10.              Cash flow Requirements. The seller does not have the equity required to grow the business and cannot get financing.
So, if you are thinking about buying a business, from my perspective, it is really not that important to find out why the business is selling. What is important is to select the right kind of business for you. Once you find it, conduct the right level of due diligence to ensure that what you bought is exactly what you are going to get.
Should you want to know more about buying or selling a business in Central Florida, please contact Fernando Simo at 407-361-8886, email me at or please click here for more information