Tag Archives: Both

Do You Sell the Company or Grow Bigger? Four Options

Situation: The CEO of a successful company is considering two options: sell the company or grow to the next level. She believes that the company could be sold for an amount that would satisfy her financial needs. Also, the prospect of a long vacation and more time for family is appealing. Do you sell the company or grow bigger?

Advice from the CEOs:

  • First Option: Pursue funding to take the company to the next level – through either private equity or venture capital. Present an optimistic, but credible, upside return for the investment; back this up with a realistic lower estimate to cover exposure.
    • Both funding sources only buy the home-run model. Two reasons:
      • They need potential and credible home runs to sell to their investors; nobody invests in solid base hits because the return is insufficient for the risk.
      • They assume that the funds recipient is overestimating what they can do.
      • Given the existence of new technology to expand the company’s presence, it has a legitimate home-run model.
    • Hire a pro to help obtain funding.
  • Second Option: Take a shot at buying the company’s principal competitor – this provides the opportunity for rapid growth at low risk in the existing market and will make the company more appealing at a higher price.
  • Third Option: Based on personal goals, if the company can be sold now at a good price – do it. This will enable you to fulfill your life goals.
  • Give the first two options 12 months. If there is no or limited progress in 12 months start taking two successive months off on vacation – allowing minimal time to monitor the company. If vacations are satisfying, sell the company.
  • Ask yourself a serious question – do you really want to be on extended vacation now or is this an objective for 3-5 years out? If the company already has strong momentum, why not see what can be built and then sell. There may be more adventure in this.
  • Fourth Option: Take some money off the table – enough to build your dream – but continue to own controlling interest in the company. This offers both choices.