Businesses change hands for a variety of reasons, only a few of which might be considered positive from the viewpoint of selling owners.  I can think of three positive circumstances under which businesses sell or change hands.

• Normal lifetime planning.  Some, but not many, businesses sell as result of normal lifetime planning by their owners who plan for and execute the sale of their businesses on their own timetables and terms.  I am assuming here that the owners would get and keep their businesses READY for sale in order to be able to accomplish their planned objectives.  Management buyouts (or buy-ins), Employee Stock Ownership Plans (ESOPs), leveraged dividend or share buy-back recapitalizations, and other techniques are often used for these transfers, in addition to outright sales.  For a more in depth discussion of these and other ownership transition tools, see my book, Unlocking Private Company Wealth.
• Planned gift and estate tax planning that is timely accomplished.  Owners of many successful closely held and family businesses engage in gift and estate tax planning as a normal means of ownership transfer to their children.  Gift and estate tax planning takes time, often many years, to accomplish transfer goals, so if that is your goal, the time to begin is now.
• An unexpected offer comes along and the business is READY for sale.  If a business is READY for sale and an unexpected and exciting offer comes along, a highly favorable sale can occur that will be beneficial for all of its owners.

In my experience,  most businesses do not sell under ideal, or even favorable, circumstances. In fact, many businesses that should be sold are never for sale and their owners continue to run them long after they should have made plans for a favorable sale.

Nirvana is not always with us, and business, economic, and financial conditions are cyclical. When a business is sold, the objective should be to get the best possible price and terms available in the market at the time of sale. Already, we are beginning to see the importance of being READY for sale

The point of this discussion of why businesses change hands is to highlight that many, if not most, sales occur unexpectedly.  Logically, this places a premium for business owners to get their businesses in a state of being READY for sale and to maintain them in that condition. We will talk about what this concept of being READY for sale means in more  detail shortly.

In the meantime, be well!

Chris