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Striking a Deal: What Motivates Sellers

What would cause a seller to part with his or her business, especially if it is a business that the seller started from scratch? Some buyers are pressured to sell by difficult life circumstances, which can be an advantage to the buyer. Others may have information that indicates that it is time to get out of a business before it starts to decline, which is a definite disadvantage for the buyer.

Some of the most common reasons for selling a business include:

Reasons to the buyer's advantage

  • Poor health
  • Family problems, divorce
  • Business has run out of cash
  • Personal financial difficulties
  • Retirement
  • Partnership woes
  • New opportunities, no time to focus on the business

Reasons to the seller's advantage

  • Market trends for industry or business are declining
  • Tough competition, commoditization of products/services
  • Technology outmoded, value of IP declining
  • Increasing rents or no option to renew lease
  • New bylaws will have a negative impact on sales
  • High crime, declining area or local economy
  • Increased insurance costs, increasing legal costs and litigation

Striking a Deal: Introduction & What Motivates Buyers Striking a Deal: Tax Considerations

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