Advantages and disadvantages of selling your company

Everyone starts company keeping some personal and business goals in their mind with no intention of selling it. These are situations or circumstances which may arise in future and force a business owner to sell their own company.

There are many reasons of selling a company such as children’s not interested in taking over the business, business owner himself want to enjoy the retirement life with accumulated money & assets, interest of moving from established business to a brand new start-up, nobody in the family to take over the business etc.

One of the options that are mostly preferred by many of the small business owners after selling their businesses is to remain engaged with their own business as a part time or full time senior advisor/leader or a consultant. Remaining engaged with your business and maintaining your existing relationship with key employees, suppliers and customers will not only increase the value of your business but also influence potential buyers to pay more for your business. Remaining engaged with the company helps maintain your relationship of trust with customers and even minimise their risk and lessens disruption.

Selling your company is a one-time event and it comes with various benefits but you must be aware of its pitfalls too.

Also See: Corporation Tax When You Sell Business Assets

• Advantages of selling your company
• Disadvantages of selling your company

Advantages of selling your company

You may get some benefits in selling your company which are specified below –

1. Favourable economic conditions, market trends and attraction of many potential buyers for your business may give you high price for your company.
2. You can easily pay your personal debts (If any) from the profits you have earned after selling your company.
3. You can invest these selling profits into other businesses or projects for higher return.
4. In case you are facing financial difficulties and unable to arrange the finance for your business, company selling is the best possible way out.
5. Selling of business makes you free from your responsibilities and you can spend much time with your family or in travelling.
6. Provides you opportunity to remain engaged in your business as a part time or full time senior advisor/leader or a consultant that help the buyers in maintaining the relationship of trust with the new ownership.
7. Diversification of personal finances is another advantage that a business owner enjoys after selling the business. If the most valuable of your assets is equity, selling of business allows some or all of your assets into more liquidation and more diversified investments.

Also See: Trivial benefits: Not Trivial Enough to Ignore

Disadvantages of selling your company

There may be some potential challenges that comes in your way of selling a business, it may include –

1. Negotiating the sale of your business can be a lengthy and a time consuming process.
2. You may be required to sign a non-compete agreement which not only limits you to engage in consultation with similar businesses but also prohibits you to start a new business in the same area for a specific period as per terms & conditions of the agreement.
3. The legal cost of selling a business can be high.
4. Selling of a business may affect the morale of the working employees and bring in them a feeling of uncertainty for future.
5. If your company is in profits, you are losing a lot of future money by giving your business in the hands of new owner.

It is suggested that you must consult with your family, friends, attorney and accountant before arriving at the critical decision of selling your company.

In case you want more information or advice on selling your company, kindly call us on 03330886686 or you can also e-mail us at enquiry@dnsaccountants.co.uk

Also See: How to Value a Company or Business

About the author

Vidit Agarwal
Vidit Agarwal, Marketing Director of dns accountants, award winning accountancy firm in London. He comes with a great experience and expertise in IT and Marketing related activities.