Companies for sale

It only takes a few moments to type in the search engine: “companies for sale” and we are shown a significant number of pages with advertisements. They concern the sale of companies, but also the sale of shares, ideas for taking over ready-made businesses, or proposals for cooperation as investors. In today's world, many entrepreneurs look for a buyer for their business for various reasons. There are various reasons why entrepreneurs decide to put their companies up for sale.

Exhaustion of business credit options, investment credit

This is one of the possibilities in which a company has no additional possibilities to increase or take out a loan for the development of its business. An investment loan is intended to finance ongoing projects. Its purpose is to restore, modernize or increase the value of fixed assets. It is also used for the purchase of intangible assets, or the acquisition of shares in companies or long-term securities.

However, before the bank grants such support, it carries out a detailed analysis of the borrowers in terms of the economic and financial aspects of the project. Banks grant investment loans after a positive analysis of the company. In addition, they require collateral in the form of equity, which becomes a real obstacle for the entrepreneur in obtaining financial support.

For this reason, entrepreneurs often decide to sell their business because they cannot afford to continue running it. They have another alternative. An external investor can be a viable option for raising capital, often also bringing valuable added value to the company.

Capital-intensive investments and the sale of a company

The definition of capital intensity is

the ratio of the value of fixed assets used in production to the value of production obtained with their help.

The capital intensity coefficient therefore indicates the amount of investment expenditure necessary to achieve a given production effect.

Based on economic research in the small and medium-sized enterprise sector, it has been established that entrepreneurs who make decisions related to estimating the funds needed for investments in the company are largely guided by intuition. They do not take into account calculation methods, mathematical and statistical methods, which could show a completely different result. Such attempts to determine capital intensity would make it possible to determine the actual financial needs for the implementation of a given project in the company or the owner's vision for development. This is undoubtedly one of the weaknesses of businesses operating in this way.

Lack of capital, lack of professional management staff and time for investment projects means that small and medium-sized enterprises need outside help. The weak point of entrepreneurs in this case is their overly perfect vision of themselves as specialists with high competence and management skills. Of course, such situations and behaviors of entrepreneurs cannot be generalized. However, it is important to remember that implementing large investments is usually highly capital-intensive and therefore requires a radical change in the operating concept. The inappropriate policy of small and medium-sized enterprises often leads to the sale or closure of the company. Our vision of further business development with our participation can only make sense in cooperation with investors.

Increased business financing due to changing economic conditions

When unforeseen situations and events occur in the world in the economic and business fields, our business may not be able to cope with the changes they bring. Regardless of whether they result from intentional human actions or are the result of disruptions to the proper functioning of the global economy, they place a heavy burden on entrepreneurs. A combination of adverse circumstances, economic fluctuations, unpredictable human behavior, and the introduction of new legal regulations can lead to a loss of liquidity and the financial benefits that a well-functioning company has generated so far, forcing the owner to sell the company.

An example of such a situation is the current crisis, caused by the Covid-19 coronavirus, which has had a very destabilizing effect on the economy of the whole world. In such conditions, many companies have gone completely bankrupt, many are on the verge of bankruptcy, a huge number of entrepreneurs have been forced to make group layoffs, and still others have been sold for a pittance.

Changing economic conditions force entrepreneurs to adapt to the new market realities. Some of them find themselves in the new reality, others have to look for radical solutions. Many entrepreneurs decide to sell their companies. The increase in business-related fees, taxes, and the rising cost of employee maintenance no longer allow them to run their businesses. It is probably for these reasons that many companies have been put up for sale.

Categories: sell cleaning company, buy transportation company, sell construction company

//M.K.

Illustrative photo

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