Knowing this, why would anyone want to liquidate their business? I will concede that I was one of those individuals. One of my businesses was quite complicated and interested buyers wanted me to stay on for an extended period of time. Since I had done quite well with the business, I chose to just liquidate the assets. This, in hindsight, was a very selfish act because it created unemployment for over a dozen people and much of the business we brought into the province was halted. Out of province customer relationships that were forged over time ceased and our customers naturally looked for local or lower cost, out of province options. Knowing what I know now, I would have structured a deal much differently in order to have the industry retain the business and talent.
Over the years, I have found that the most common reasons owners choose to liquidate rather than sell are because they are forced to, they don’t think their business is worth anything more than the assets, or they have done well with the business and don’t want the hassle of going through a sale.
These are understandable reasons, however, when I have asked owners who have liquidated if they talked to a business broker or business valuator to see if the business was worth more than the asset value, it was no surprise that the answer was “no”. Considering there is most often no cost for a broker to give their opinion of value, why would you not at lease explore the possibility that your business is worth more than the asset value. Worst case scenario, you proceed as planned, best case scenario, you walk away with more cash in your pocket.
Regardless of the exit strategy, always attempt to capitalize on the good will you have generate by speaking with the a business broker who can maximize it for you. After all, that is why they are there.