Is it time to sell your business?

Hundreds of companies are bought, sold, and merged every year in Norway alone, and in recent years the number of company transactions (M&A) has been increasing. The reasons differ vastly from business to business. Still, it is often related to changes in the market, a desire for further development and growth, or more personal reasons such as a generational shift and the realization of values. More and more often we see owners selling whole or part of their business to diversify their net worth as much of it is tied up in one company.

How do you know that you should start a sales process?

Are you in a situation where you are considering selling the business, either due to your initiative or because you have interested buyers knocking on your door? Many people experience much uncertainty in such a situation, and the recurring question is how to know that a sale is the right choice and when you should initiate a sales process?

In some cases, selling all or part of the business can be the best choice for the company and its owners. The company may benefit by having more financial muscles to grow, and the owners may realize some of the values that have been built over the years. Many businesses may also benefit from gaining new competencies and skills to expand and grow.

The business often represents significant values, perhaps even greater than the owners are aware. Many business owners greatly value having an advisor to guide them through the process to ensure that the value potential is maximized. A good M&A advisor can identify the right buyer, which means the best possible price and conditions, and a buyer who can contribute to the company’s further development.

Realize values and potential

A common reason for selling is that the company is positively developing but has significant untapped potential. In order to accelerate growth and realize this potential, the seller wants partners who can contribute to the further development of the company and take it to the next level.

A new partner can provide the company with the expertise and the financial muscles it needs to continue developing. This can be anything from broadening the product and service portfolio to increasing the sales force and adding new competencies in strategy work, business development, or international growth. This is how the company is further professionalized, which is required to take significant steps forward, both locally and internationally. Often, the buyer invites the seller to stay on as part owner, meaning the seller can take money off the table and still participate in the further development of the company.

A sale is often a strategically smart move, as it allows for increased diversification of wealth and may also add a partner with expertise, muscle, and will to grow, which can be redemptive for the company’s potential. The benefit of selling parts of the company can therefore be significant. You get the opportunity to realize some of the gains and take part in the company’s further growth, and the values ​​created together with the new partners.

Imminent generational change?

Some companies have been in the family for generations. Historically, expectations from the oldest generation were high, and it was almost a requirement that the heir take over. Fortunately, this is no longer the case. Today’s descendants and heirs have more freedom to decide over their future and, in order to distribute the wealth equally between the heirs, an increasing number of companies are sold. In some cases, we also see that the current owners do not want the children to take over, as the responsibilities, risks and workload of running a business can be demanding. Some families are also looking to diversifying their wealth, which is easier if a larger portion of the net worth is not tied to the family business.

The explanations are different, but common to many generational changes is that they are often demanding, with a lot of emotions involved. Therefore, it is imperative to start early in such processes, well before the generational change occurs. This gives everyone involved the time needed so that different choices and decisions can mature. This often results in more orderly and harmonious processes while at the same time ensuring correct pricing and good timing of the sales process.

Take control of the sales process

Regardless of the reason, it is essential to take control of the sales process and find a buyer who can add strategic or financial expertise and strength to lift the company further. By conducting a thorough and well-prepared sales process, we often find that skepticism changes to optimism. What appeared to be an undesirable situation will instead be a choice for the future, where the new partner and owner represent both opportunities and potential.

Saga Corporate Finance has over 20 years of experience in selling private companies. Our experience is that the earlier we get into the process, the better the result. Our M&A process always begins with an informal meeting where we get to know both the seller and the company well. We are often involved as a conversation partner for a business owner for several years before a sale is decided. The sales process always takes place in close dialogue around your wishes and ambitions, focusing on establishing a value-creating sales process.