What are the most Common Reasons why People Sell their Businesses?


7th December 2020
The short answer is that there could be any number of different, contributory factors that would make someone feel the time had arrived to relinquish their business and pass the purse strings onto another individual or company.  

The sale might not be down to one specific reason, but rather a combination of circumstances coming into play.

Sometimes the real reason for selling up may never be disclosed, or even come to light. Indeed, a person might decide to explain away or fabricate their real motivation, due to the actual reason being too personal, which they wouldn’t want to divulge to a third party.    

A seller’s unwillingness to be forthcoming might also be because of the fear that if they DID reveal their true reasons, the purchaser might run for the hills. Regardless, any interested party would always want to know why a particular business is being put up for sale. It’s the obvious first question! 

The reasons for selling a company are extremely varied – ranging from the banal to the bizarre – but here’s a shortlist of the most likely candidates: 

I have had enough – the issue of burnout
Nothing lasts forever – and sometimes a seller just has to admit that they can’t be bothered anymore. The business is no longer enjoyable, it feels like a chore. Aligned with this state of mind, may be the reality that the venture isn’t as profitable as it once was – and the owner feels that it’s all become an uphill struggle. When running a business turns from being fun into a fag, then it’s probably time to quit.  

Being financially strapped 
This is a key factor in why a seller would wish to sell a business – but it might often be the last thing that they would want to own up to! Businesses get themselves into financial difficulty for all kinds of reasons – some avoidable, some inexcusable, some just down to plain bad luck. Making catastrophic and seemingly irreversible financial decisions - such as expanding too quickly, making poor investments, facing a sudden loss of key customers – are all causes of company liquidation. For those still trading, selling up can often appear to be the only way out of a financial straitjacket. 

The business isn’t making as much money as it once did
Declining revenues and profit margins being squeezed are all-too-familiar situations facing many small to medium sized businesses. The onset of economic downturns, often after years of struggle, can often be enough to discourage business owners from carrying on the good fight.  If the owner can’t see an end in sight or – to them, at least - there seems little prospect of the business ever turning a decent profit again, then often the inevitable conclusion is to sell up and move on. 

It's time to seek pastures new
A business owner who has had his or her head turned by a fresh (and possibly) more exciting opportunity is often motivated to sell.  This might, of course, be a convenient way of gilding the lily and putting a more positive slant on the current state of the business, possibly to save face. Nevertheless, once an entrepreneur, always an entrepreneur. There has never been a shortage of company bosses who become restless and eager to take on a new challenge, if it comes along. 

An industry that’s seen better days 
Business can be cyclical or go out of fashion. In this fast-paced online era, staying current and relevant is arguably more essential than ever. Technology is king! Traditional offline businesses that have either failed, or that are unable to adapt to the ways that modern commerce is carried out, can suffer and fall by the wayside. Often, this is why “old-fashioned” firms get put up for sale.  From the buyer’s perspective, is this a genuine opportunity or not? Is this a company that’s had its time, or is there untapped potential that can turn an ailing, failing business into a future star? 

Personality clash – partners falling out with each other  
We are all human and we all have fallings-out, from time to time. In business, what once begun as a promising partnership of like-minded individuals with a great idea or plenty of ambition, may gradually sour. Consequently, one of the most common reasons why businesses are sold is because the owners have fallen out and deduce that the only resolution is to go their separate ways. Pulling in opposite directions can be hugely damaging for the fortunes of a business, leading to resentment, mistrust and lack of direction.  In such circumstances, a fresh approach from a new owner might be all that’s needed to revive a going concern that’s short of gumption.  

It's time for a change of Lifestyle 
Everybody can get stale or grow bored. Maybe a business has given someone a fantastic living for a period of time and there is no longer the need to work at one hundred miles an hour, or they can afford to wind down, or pursue other interests. A business owner who wants to retire, or simply call it a day for a new lease of life will probably be as determined as anyone to bid the venture a fond farewell and be resigned to the decision they have taken.  They may well be leaving behind a successful and profitable business which has bags of potential awaiting a new owner.  

Buyers need to keep an open mind
Any buyer worth his salt will approach buying a business with an open mind. Whether it’s being sold as a distressed or liquidated asset, or as a going concern, the story as to why a company is up for sale may be something of a tangled web – or surprisingly straightforward. In truth, honesty is always the best approach by the seller, or whoever is the representative.  A buyer who discovers that they’ve had the wool pulled over their eyes and that an initial explanation turned out to be a pack of lies, isn’t likely to encourage them to make a generous offer.  Remember, a prospective purchaser will always do proper due diligence and be mindful that the reasons why a business is up for sale could be for more than one simple reason. The question is: will that reason be made immediately obvious or will it require a little more digging?