The FIVE Reasons Business Owners Want to Sell (Only THREE Apply to You)

Mindset is a HUGE component in dealmaking.

In fact — the first training module in my Dealmaker CEO program is all about where your head needs to be if you want to be a successful dealmaker. It’s the most important lesson of the entire course.

But today, I want to focus on the SELLER’S mindset. Specifically, the reasons WHY they want to sell.

All of these reasons are certainly valid… But as a potential buyer, you only need to pay attention to three of them.

If you meet a seller who wants to get rid of their business for either of the other reasons… stay away. Far away. I’ll explain why in a moment.

First, let’s look at the three positive motivators of highly distressed sellers.

Sellers to Target

1. Exhaustion

Exhaustion of the business owner or the business itself is a top reason businesses are sold or required to change ownership. After working their butts off for decades, many owners are more than ready to retire and enjoy the rest of their golden years.

The problem often is they’ve built this profitable business — their legacy — and have no one to turn it over to.

Unfortunately, most of this type of seller never find that “safe pair of hands” to protect their business. They’d rather shut operations down than see the business fall into the wrong hands.

By building the rapport, credibility and trust as we so often talk about, you can position yourself as the one who will help their legacy and business operations live on.

2. Stagnation

In this case, the owner-manager feels they have taken the business as far as they can.

Once people have owned businesses for 10-plus years with the same old routine, their mindset often changes. Even if the marketplace the business occupies presents exciting new opportunities for growth — like structural market changes, new technology advancement, new legislation, etc.

Sometimes business owners simply don’t want to go through the next growth curve and would rather let someone else with more energy, passion and drive go on that journey.

For example, I helped an associate of mine acquire an asbestos-removal company several years ago. The business was in a country that had just introduced new legislation that provided a significant growth opportunity for the business and everyone else in the market.

The seller just didn’t have the energy and passion for putting in three–five more difficult years of sweat opportunity, so he wanted to sell. Finding a trusted, safe pair of hands appealed to him as a way of leaving the business but maintaining peace of mind.

Even though the owner wanted a nominal sum of cash on completion, the market opportunity and balance sheet strength afforded almost three times the amount of funding required, so it was a fantastic deal for everyone involved.

Obviously, this is one type of seller you want to target.

3. Lifestyle Change

Sadly, lifestyle changes are very common… And these reasons fall into our wanted seller category.

Sometimes owners get sick, as do their spouses, children and other family members.

Sellers also get burned out, frustrated, bored or just simply run out of ideas.

These sellers are perfect target.

You might think all these sellers are old. They’re not.

Simon Cohen was a young, successful entrepreneur who started and built his public relations business, Global Tolerance. He was crushing it — he just burned himself out. Plus, his partner had just given birth to a baby girl, and Simon wanted to be with his family.

So he launched a campaign to find the perfect buyer for his business and gave away 95% of the business — worth seven figures.

My point is there are frustrated, burned-out business owners of all ages.

Sellers to Avoid

The final two motivators are the types of sellers you want to avoid.

4. Serial Entrepreneur

One strong motivator — and a big one you need to avoid — is the entrepreneur-versus-manager conundrum.

Some people are born entrepreneurs and love setting up businesses.

I think that’s a stupid idea, considering the risks and the personal and financial sacrifices that are required. And you can bet that an entrepreneur will not sell out for less than top dollar if they are in the 4% who have survived over a 10-year period.

You see, once entrepreneurs have built the business into something established that needs proper management, they get bored.

I’ve seen it hundreds of times in my career.

They want to sell out, have a break and some fun and then move on to the next venture on their bucket list. They may even invest in other people’s ventures. This is what we call a serial entrepreneur.

5. Desire for Cash

There are always owners who want to cash out of a business. And every business is for sale at the right price.

For obvious reasons, avoid these sellers like the plague — unless the business has hit a performance peak.

If the plateau is caused by market dynamics or anything else that you cannot directly influence, strike this business off your list and move on to the next one.

However, if that business has hit a peak as a direct result of the owner-manager running out of energy, then (as I explained above) that business should definitely be on our target list.

Remember — your perfect, distressed seller will likely fall in the first three categories. You will, of course, come across sellers in buckets four and five, but avoid them.

With 2.6 million-plus businesses for sale… there are plenty more fish in the sea.

Until next time, bye for now.

Carl Allen

Carl Allen

Editor and co-founder, Dealmaker Wealth Society