Why do we sell our companies ?
Recently an important businessman asked me: “Why sell other businessmen your company? Should I be selling mine?”
The most common reasons for doing so:
1. Succession: Many businessmen do not have children interested in carrying on the family business; some study aviation, medicine or art and are not interested in business activities. As the saying goes “the eye of the master fattens the cattle”. Most businesses do not function optimally without the presence and supervision of the owners, for this reason it is common for business employees that they prefer to sell their business before delegating it completely to the employees.
2. The only constant is change: The world of business is constantly changing and it is not always easy to adapt to it. Globalisation and economic openness makes competition more and more difficult, as a result of this some businesses prefer to sell their companies to competitors or foreign companies that want to use it as an internationalisation strategy to enter the local market before taking the risk of losing market share and affect business performance. Changes in regulation, for example the form of hiring construction companies or the changing standards of The National Institute of Food and Drug Monitoring for pharmaceutical companies. They both require many investments and increased working capital. This means many businesses look for strategic partners to invest significant resources or to acquire them to survive.
3. Profit making: Selling a business with good financial indicators today is the equivalent to many years of profits. In order, for a business to grow they are required to reinvest a large proportion of net income. In spite of a business’s ability to generate income, many of the owners usually are not able to fully enjoy it because they must reinvest profits to take advantage of market opportunities, maintain their competitive position and renew assets that guarantee the longevity of the business. It is common to see millionaire owners who are living in a prudent manner sell their business to have liquidity and the free time to complete main life dreams such as; buying a yacht, playing golf everyday, traveling the world and having a comfortable lifestyle.
4. Life is short: The Germans live to work, the French work to live.What good is it to die and be the richest in the cemetery? Many people spend their whole life increasing their income and they die without enjoying it, their wealth is passed on to their heirs. I think that life is full of life experiences, servings other and leaving a legacy to society. Its important to find a balance between your work, family life, relaxation, spirituality, fun and wealth.
Why have unlimited money to travel when you no longer have the health to do so?
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