14 DIFFERENT WAYS TO SELL A COMPANY
Business owners have a variety of company sale options available to them. Some of those options are more suitable than others based on individual motivations for selling, or financial circumstances.
The best way to sell your company depends on your own situation. Timing is also a key factor in the decision a company owner makes – which should be taken with professional advice.
14 DIFFERENT WAYS TO SELL A COMPANY
WHY DO YOU WANT TO SELL YOUR COMPANY?
Whether it is to facilitate retirement or venture into new business opportunities, it is never too early to start planning a company sale. If you are patient and seek expert advice on how to time your sale, you will maximise your reward.
It is important to assess the business exit options available to you, as well as the various deal structures for you to consider when selling your company, such as a clean break or private equity investment.
Whether you have selling plans already in motion or not, our experienced professionals are comfortable with jumping in at any point of the process.
There are different company sale options for different selling motivations and circumstances.
For instance, a retirement may lead to a family succession, and wishing to stay involved in some capacity could drive an asset sale or management buyout (MBO).
14 WAYS TO SELL A COMPANY
As there are many ways to sell a company, it is wise to seek expert advice to match you with one of the following options which are outlined below. We will take you through each of them to help match the best company sale option for your circumstances.
1. Partial sale
A partial sale is the sale of a portion of the company, under 50% so that the existing business owner retains a majority share.
This type of sale allows business owners to remain a part of the company they have built whilst generating resources for growth and expansion.
2. Asset sales
An asset sale offers owners the option of removing certain company assets, typically in underperforming areas, or to sell to generate funds.
The buyer may also wish to handpick certain assets to gain more control of areas of particular interest or potential.
If this is applicable to you, we strongly encourage you to speak to a company sales expert such as KBS Corporate.
3. Share sales
This is when the buyer purchases company shares as opposed to assets.
The seller can exclude any specific assets, but the buyer may wish to ‘cherry pick’. Therefore, expert advice in negotiations should be found through a third party such as KBS.
4. Selling a minority interest
This entails selling a small percentage of your company. It can have benefits for growing your business whilst you remain involved in it.
However, there are various pitfalls to this type of company sale that might be applicable to your circumstances – and you should seek expert advice on the matter.
5. Management buyout (MBO)
This is when the existing management team acquire ownership of all or a part of your company.
An MBO can lead to greater potential for a preferred level of involvement post-sale (if desired) – although emotions can come into play during negotiations due to the personal relationships that have been formed, as well as potential distractions when wishing to continue operating your company during the sale process.
Leaving your company behind is emotional, but handing it over to a trusted group of employees that you brought in can feel fitting.
6. Management buy-in (MBI)
Like an MBO, an MBI consists of an external manager/management team acquiring a controlling ownership stake and replacing the existing management team.
This is a suitable option typically for companies that are underperforming.
7. Initial public offering (IPO)
An IPO is the process of selling shares/an equity stake to the public. Typically written with the help of an investment bank, an IPO sets an offer period for investors to purchase shares before the company is floated on the stock market. This is a preferred option for those wishing to generate cash.
8. Third party sale
This entails not directly selling your business and instead seeking the help of an expert – a third party, such as an insurance company – that can conduct the sale on the seller or buyer’s behalf.
9. Private equity sale
This type of sale entails selling company shares to an investor, in exchange for investment (capital). The involvement of the investor in your company depends on what is negotiated.
A private equity sale is ideal for business owners who want to remain involved/as leader of the business, whilst navigating the company in a successful long-term direction.
10. Franchising
A franchise is an extension of an established company in which its licensing, products, branding and knowledge is granted in exchange for a franchise fee.
Whether the fee is a one-time payment or a retainer can be negotiated.
For the buyer, this method can propel success due to operating a recognisable, successful brand. For the current company owner, expansion can have many rewards, including more brand recognition.
11. Immediate payment sale
An immediate payment sale occurs when the buyer pays in full up front before taking ownership of the company.
This can be set out as a goal by the company owner, but flexibility is encouraged where possible to attract more buyers – who might pay more in a phased payment arrangement.
12. Phased payment sale
A phased payment sale entails the agreed total sum being paid to the seller in instalments. The terms are set out in the negotiation phase and this type of transaction is best overseen by a professional body.
13. Selling a company in financial difficulty
If your company is underperforming financially, selling part or the entirety of it might be the only option you have.
With the right marketing, you may be surprised about the risks entrepreneurs are willing to take. After all, they will not have realistic expectations of taking ownership of a perfectly performing company with minimal challenges.
It is advised to seek professional expertise from KBS to maximise the value of your company to make the sale worthwhile.
14. Employee Ownership Trust (EOT)
An EOT is established on behalf of a company’s workforce, formed for the long-term benefit of the business.
The EOT must own 51% or more of the shareholding but a board of directors will run the company, with no requirement to involve the employees in their decision-making processes.
There are substantial tax benefits for the vendor with the EOT company sale option.
KBS CORPORATE’S BUYER MATCHING ENGINE (BME)
Following thorough identification and detailed analysis, we carefully match a buyer to your business that will achieve the best possible deal for your company.
Our Buyer Matching Engine is a bespoke, proprietary piece of software, developed by KBS Corporate, which uses ‘big data’ and algorithms to streamline the buyer research process on a global scale.
Our extensive buyer network has been built and perfected during the 25 years-plus we have been in operation to offer our clients a full range of company sale options.
Hiring a specialist company sales adviser can take care of all the time-consuming, technical aspects of the transaction. KBS Corporate’s bespoke, tailored service and trusted advice will enable you to choose the most suitable company sale option for you.
Make a confidential enquiry with one of our dedicated professionals.
