Selling a business is a significant decision for any business owner – particularly if it’s a business that you’ve nurtured and grown from scratch.
When it comes to exiting your business, there are various options to consider, one of the most common choices is selling the business. With that comes a choice of whether to sell to a private equity investor or go for a traditional sale.
A private equity investor invests with the goal of generating a return on their investment. They have substantial financial resources which can be appealing if your business is in need of capital for growth or expansion. When selling to a private equity investor, it’s possible for you to retain a portion of ownership although this usually involves selling a significant stake in your business thereby giving up a large degree of control. Whilst private equity investors often bring expertise, connections and resources to the table, they often aim for a relatively quick return on their investment.
In contrast, in a traditional sale, the business is typically sold to an individual buyer or other business entity and the ownership is transferred for an agreed purchase price.
Traditional sales can be structured in various ways to offer flexibility in terms of payment structure and transition plans and allow a seller to retain full control until the deal is finalised. Negotiating with individual buyers can be time-consuming and complex with no guarantee of a successful deal.
Whether to sell your business to a private equity investor or opt for a traditional sale is a critical decision that hinges on your specific circumstances and objectives. It’s essential to carefully assess your priorities, financial needs and long-term goals.
Enjoyed this? Read more from Sarah Brough, Forbes Solicitors