Business development · 27 February 2018

One in four new businesses are launched solely for a future sale

Business for sale
Having an exit strategy pays off

Almost a quarter of new business owners launch their venture with a plan to sell it further down the line, research has found.

According to new survey findings, collected from 1,000 entrepreneurs by financial planning service Jazoodle, 23 per cent started a company because they believed their idea would present a valuable proposition for a future sale.

Starting a business out of pure passion remained the most common factor for new founders, at 35 per cent, but was followed by a  future sale as the second.

One thing that respondents could agree on was wishing they had a way to get a realistic valuation of their business before selling. A majority admitted they had no way to gauge the value of their company.

Find out how to value your business

The study also questioned entrepreneurs on their history of starting and selling companies. 

Almost two-thirds had launched between one and three businesses, with a quarter familiar with the world of entrepreneurship behind four to six firms. An experienced 15 per cent had founded at least seven startups in their time.

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Sale

 

How to find a buyer for your business

Whilst you may have a variety of reasons for selling your business, your approach when looking to find a buyer must be as carefully judged as any other strategic decision.

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Commenting on the findings, Jazoodle founder Andrew Paton-Smith offered some reassurance for first-time founders starting a company with a sale in mind. 

“If you have confidence in your idea and you think it will sell for lots of money later down the line, then there is no issue in launching something just to sell it off. It’s important to ensure you are completely aware of your business’ valuation though and that you aren’t getting ripped off during a sale.”

He added: “Launching a new business is terrifying for first timers, but by the time you’ve done it more than once, it becomes easier,” he said.

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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