Some business owners delay selling their middle market companies, because they’re not ready to let go. That’s understandable. For Founders and Owners who have spent years nurturing a company, it ‘s not unlike raising a child. As with children, it may be difficult to imagine your business in someone else’s care.
If you have pondered letting go or are concerned about the risks involved with tying up all of your wealth in a single asset, then it may be time to do some soul searching. Middle-market CEOs who want to sell their businesses have leverage today – it truly is a sellers market with multiple buyers at the ready.
Markets are very conducive to attractive transactions for middle-market, privately held firms. Strategic acquirers, private equity firms and the banks that fund them all have an enormous appetite for attractive, good-fitting acquisitions. Putting off selling could leave you in a position where you are forced to sell later, under different market conditions and at potentially lower values.
Pros and Cons of Selling a Middle-Market Business Outright
While some entrepreneurs would rather maintain some ties to their business after a sale (financially and/or in a leadership role) – others prefer to walk away completely. If you own a successful, growing middle-market business and you’re ready to cut ties, you have options.
Many private equity firms are looking to acquire companies outright and use them as growth platforms to build organically and/or through acquisitions. Private equity firms also may have an existing portfolio company for whom you would be an “add-on” acquisition, making them quasi-strategic acquirers.
If you’re unsure what to do, take some time to weigh the pros and cons of selling. An investment banker who understands middle-market M&A deals in your industry can be a great resource if you need insight.
Pros to selling outright:
- Complete liquidity and the potential for personal wealth diversification
- If selling to a strategic acquirer or private equity firm with an existing portfolio company in the industry, the potential for higher valuation due to potential synergies.
- The business may have the opportunity to grow larger and faster.
Cons to selling outright:
- You no longer have a say in the business’s future.
- You don’t benefit from its growth as you’ve taken your money and exited completely
- There may be challenges merging two different entities together.
- Uncertainty about valued employees’ futures.
Get Advice from Investment Bankers with Proven Success
Whether you are ready to sell today or not, talk with an experienced investment banker to weigh your options. He or she can help you prepare for selling down the road and may even reveal opportunities you never dreamed possible.
At Allegiance Capital Corporation we take a unique approach to selling middle-market businesses. Through our intensive research and marketing programs, we identify the unique value propositions our client’s businesses offer and seek out buyers who will benefit the most through an acquisition.
The more value a buyer finds in a deal, the more money they are prepared to pay. That’s why we take time to identify multiple buyers, build excitement about the seller and create competition through an auction sale environment.
If you’re ready to discuss your long- or short-term options, call us. You can reach our experienced investment bankers at (214) 217-7750.
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Keywords: entrepreneur; middle market companies; selling a business; selling your company; sell your business