Methods and ways to sell a business
Practically there are currently 6 methods when selling a business.
- Direct sale
- Management Buy-out(MBO)
- Family succession
- Management Buy-in (MBI)
- IPO - Sale of shares on capital market
Direct sale – It is a commercial sale to another physical or juridical person. The commercial sale is usually the best method to get financial satisfaction from a business sale especially if you have more buyers who compete with each other.
Management Buy-Out (MBO) - It means selling the business to the management team. Usually the management team is financed by a bank or by an investment fund. It is a long time process in which the payment is done in stages as the buyers don't usually have the necessary resources. The sale is done in stages and it may last several years.
Family succession - It means to sell a business to a legal successor, an heir or an heiress. It has in view to identify the appropriate successor who has the necessary skills and abilities to run a business. It allows you to be involved in the business for a period of time until the heir or the heiress is fully instructed in the business.
Management buy-in (MBI) - The business is bought by an external management team financed by a bank or by an investment fund. The statistics show that by appealing to MBI the rarely develops and it is difficult for the seller to leave the company and many times the MBI proves to be a failure.
IPO - Sale of shares on capital market – Also referred to as a "public offering", it is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
Merger - It is happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. Both companies' stocks are surrendered and new company stock is issued in its place.