January 6, 2015

Questions to ask yourself before selling: Can the company succeed without me?

Sitting down with yourself and answering a few key questions is a good place to start when considering selling your company, or merging with another business. There are many factors that should come into play when talking about making such a big decision. One of the primary ones, and the question that often pops up first for most entrepreneurs, is, "Can this company survive without me?"

While it may sound egotistical, the fact of the matter is that if you had a hand in building the company from the ground up, or you are responsible for a major customer of the operation, it may be risky for you to think about leaving.

According to Entrepreneur, buyers considering your company may be put off if they feel like they would be unable to operate the business without you. They may also be hesitant to fully invest if your company relies too heavily on one particular client. For example, if your company has one or more clients that represents more than five percent of the business, it may not be diversified enough for buyers to feel comfortable taking the risk.   

"Generally, if your business relies less on the owner, you get a higher selling price," Jock Purtle, a broker of online companies which run Digital Exits, a Sydney, Australia-based firm operates heavily in the U.S, told CNBC. "If the operations are managed by staff or systems or technology and there's less day-to-day importance of the owner, you're going to get a higher price."

Ensuring that your company is independent enough to sustain business mergers will only result in a higher price for you, and a more effective service for your customers.