Question

1. Why would you want to sell a company? What are some valid reasons to do so? Justify your answer.

Answer 1

There may be many reasons for why the owner of the business want to sell the company. Some of the reasons are -

1) The business is not making enough profit -

The one of the basic reason why a business man would want to sell his company is that the business is not making enough profits to cover the cost i.e the business is no longer profitable one to continue carry the operations. There may be many reasons reasons why the business is not making enough profits, Some of which are lack of skill, low customer base, lack of creativity, innovation, etc. In such case it is best to sell off the company.

2) For another better opportunities -

If the owner lack skill or interest in carrying the business, it is better to sell off the company. Sometimes for exploring other better business opportunities, the business is sold.

3) Death of the owner of the company-

In case of death of the owner of the company and not having enough interest or skill by the family member or others who can take the command of the company and run it effectively like before, the business is sold.

4) Bankruptcy of the company -

In case of bankruptcy of the company the company is dissolved and sold to other company for paying the debts.

5 ) A good offer by buyer -

There might be a case that the owner is not thinking of selling the business, but there is a offer by the party which is very good i.e ready to buy at more than the market price. As such offers are rare, the owner probably would agree to sell off the company.

6) Personal reasons of owner -

There may be personal reasons of the owner that he agrees to sell his company. There can be health problem, family obligations, relocation, etc for such reasons the business can be sold.

These are the some reasons for which the company can be sold.

Hope it helps !