Why Sell a Perfectly Good Business? (OPINION)

If you’re a regular reader of this publication, you’ve undoubtedly heard the news: the Northwest Arkansas Business Journal has been acquired by Natural State Media.

With the shortening of our current news cycle, and collective attention spans, the big announcement on Sept. 1 already feels like old news. But for those of you with lingering questions about the acquisition, let me share what I’ve learned about most deals of this size. (Note: I have no knowledge of the details of the recent acquisition, aside from the two articles I’ve read here. The only question I asked the editor was if the change would affect my current deadlines, which it doesn’t.)

To the untrained eye, the sale of a business sometimes looks like the strategy of last resort. “There must have been something wrong,” the thinking goes. “Why else would they sell a perfectly good business?”

When Facebook acquires Instagram, it doesn’t take much business acumen to connect the dots and deduce why. Clearly it’s easier, faster and cheaper for Facebook to buy a company with an existing photo-sharing app than build one from scratch. The motive for the acquisition is obvious.

When an acquisition involves two privately held companies, however, the underlying motivation can be murkier. The parties aren’t compelled to justify why the deal was done. There are few, if any, regulations to satisfy or public disclosures to be made. Small business are bought and sold every day in the same way they operate: in private.

After a decade in the M&A industry, I’ve found that most “perfectly good” (i.e. successful and profitable) businesses sell for perfectly good reasons. While the reasons themselves can vary, they typically fall into two primary buckets: business and personal.

Small businesses tend to have a small number of owners— a husband and wife, a family or a handful of partners. Unlike their publicly traded brethren, the sale of a privately held business often comes with personal reasons attached. The founder(s) may be tired after decades of running the business. They may realize it’s time for new blood and fresh ideas. Perhaps they’re no longer willing to shoulder the risk or continue subordinating other interests and endeavors to the rigors of owning the business.

Personal reasons often help trigger a sale, and there’s nothing wrong with that.

The more self-aware and proactive owners also acknowledge when a sale makes good sense from a business standpoint. It may be that M&A activity in the industry is hot and valuations are high. Perhaps the current owner knows they’ve grown the business to the best of their ability, and reaching the proverbial “next level” requires a different skill set and/or access to more capital. Many of these owners also admit that somebody else will need to guide the business into a changing competitive environment.

Continued growth of the business often triggers a sale. That’s not only a good reason, it’s usually a good thing for everyone involved.

While selling a business can be a complex, time-consuming and often gut-wrenching process, the alternative is often worse. Denying that it’s time for a change — at the business or in the owner’s personal life — can result in missed opportunities, inertia and deterioration on a number of levels.

What warms my heart is when someone cares enough about the future of their business — and all of the many stakeholders who are affected by it — to find a new owner and hand over the reins.

So, to anyone who has recently sold their business, I say thank you for making the difficult choices now rather than waiting until it’s too late. Thank you for caring about the continuation of what you’ve built and all that it brings to the local business community. Thank you for all the risks you took to start the business, for living with the risk while you owned it, and accepting the risks associated with selling.

Thank you from someone who knows firsthand what you’ve been through. And congratulations on the sale of your business. 

Barbara Taylor is the co-founder of Allan Taylor & Co., a boutique mergers and acquisition firm in Bentonville. She is a regular contributor to Forbes.com and a former New York Times blogger. You can follow her on Twitter @ballantaylor visit her company website at www.allantaylor.co.