--- title: "Should Distributors Sell Their Companies?" description: "As a company owner, facing the question of whether to continue or sell the business, one weighs reasons for both options. The business, like a troublesome child, brings both deep emotional attachment and increasing challenges, prompting consideration of selling." author: "潘文富" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-09-27" language: "en" canonical: "https://xinjignxiao.com/en/articles/should-distributors-sell-their-companies-3affd2f0/" markdown: "https://xinjignxiao.com/en/articles/should-distributors-sell-their-companies-3affd2f0.md" original_source: "https://mp.weixin.qq.com/s/SEr3HPs3BhNit1s9BIgTRQ" translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86-%E8%A6%81%E4%B8%8D%E8%A6%81%E6%8A%8A%E5%85%AC%E5%8F%B8%E5%8D%96%E6%8E%89-3affd2f0.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/should-distributors-sell-their-companies-3affd2f0/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Should Distributors Sell Their Companies? > As a company owner, facing the question of whether to continue or sell the business, one weighs reasons for both options. The business, like a troublesome child, brings both deep emotional attachment and increasing challenges, prompting consideration of selling. Private Enterprise Internal Management Research / Pan Wenfu As the boss of a company, facing the company you created, whether to continue or sell it directly, you are constantly finding reasons from both positive and negative aspects. Selling requires sufficient reasons, and continuing to operate also requires sufficient reasons. Not to mention that business is difficult. The current business is like a troublesome child you raised with your own hands. Although it is your own flesh and blood, and you have raised it for so many years, the feelings are definitely deep, and spiritually you cannot do without it. However, this child is becoming more and more disobedient, more and more worrying, causing more and more trouble, and the cost of raising it is getting higher and higher. Sometimes when you get angry, you really want to ignore everything and directly sever the father-son relationship! But after calming down, you cannot bear to do it, and you are reluctant. The same is true for a company. The small business back then was built to its current scale by your own hands. The ups and downs during the process need not be detailed one by one. It is not easy to survive until now, and it can even be said to be a narrow escape. Speaking of making money, indeed, you have made a lot over the years, and your business empire has been established. Many of your dreams back then were realized based on the success of the business. Your status in the family and even in society was also established based on this business, including many current social relationships and resources, which are also maintained in this company. However, the current state of the business is not what you want to see. Although the boss's starting point is to do well, after all, the scale is large, there are many people, many things, complexity, wide involvement, internal employees are not capable or handy, and even unstable. External upstream and downstream customers are not easy to deal with, and competitors are even more covetous. Due to limitations in professionalism and energy, the boss begins to feel powerless, and control over the company and business begins to decline, even feeling out of control. The direct manifestation of business operation quality is the level of profitability, and further, the ability to sustain profitability. **The so-called difficulty in business is not that there is no business to do, but that the complexity of doing business increases, and the boss's own ability is out of touch with the market environment. Problems frequently arise in personnel management, business model optimization, efficiency improvement, and cost control. Without a good business model and without accumulating many excellent employees, making less money or even no money makes it impossible for the boss to continue.** At the root, children are raised by their parents, and companies are built by their bosses. If one's own business falls into this embarrassing situation, the boss is the first responsible person. Emphasizing various objective reasons at this time is useless. So, some bosses begin to consider another question: should they sell the company? Although there has long been a saying, "Raise the company like a son, sell it like a pig," whether to sell, who to sell to, how to sell, and for how much are a bunch of new problems. 1. Why sell the company? 1. Escape from the difficulty of the current business, unable to continue. So, they plan to enter another industry that looks easy and profitable, such as setting up a small loan company, or directly investing in several companies, easily holding shares and waiting for dividends. 2. Safety in hand, direct cashing out. Making money in business is like playing mahjong; no one dares to say whether they have won until the game is over. The same is true for business. As long as the business is still running, saying how much money has been made is nonsense. Maybe tomorrow you could lose everything. Unless the business is stopped, the company is sold, debts are cleared, taxes and accumulated employee social insurance are handled, and even the boss himself has immigrated abroad, only then is the money that falls into hand real money. Don't look at many bosses with annual turnover of tens of millions or hundreds of millions, but they have never seen what 10 million in cash looks like, because the money earned earlier is reinvested in the business. 3. Getting older, having made enough money, basically achieving success, now wanting to enjoy life or spend time with grandchildren, so there is no need to work so hard. Sell the company and have peace and quiet. 2. What to sell? **1. Sell the company's assets** Assets are divided into fixed assets and non-fixed assets. Fixed assets are simple, including land, buildings, equipment, raw materials, vehicles, goods in warehouses, external receivables, etc. Production and retail enterprises mainly sell fixed assets. Selling non-fixed assets involves the company's brand awareness, reputation, patents, technical experience, operation and management systems, customer resources, etc. Distributors have limited fixed assets, and selling them won't fetch much money. More effort should be made on non-fixed assets. **2. Sell future expected returns** A normally operating company generates certain profits each year, which can also be sold. That is, based on historical financial accounts, combined with development space, calculate the future sustainable profit space, and then sell to the acquirer at a certain annual multiple. For example, if the company earns 2 million a year and sells at a five-year multiple, it would be 2 million times five, selling for 10 million. For the acquirer, buying a company is buying future profits. 3. Who to sell to? Strictly speaking, you don't need to worry about this. Acquirers usually come to you proactively, provided you have some value, some industry influence, and some scale. 4. What does the company maintain? A normally operating company, especially one that has been operating for many years, maintains many things, such as the boss's social status, industry status, upstream and downstream customer relationships, government relations, credit ratings and loan lines from financial institutions, and the team the boss has cultivated over the years. These maintained things, logically, should become the new boss's after selling the company. However, this is a bit unclear. Some bosses can transfer these resources to the new boss in the early stage, but some resources will be copied, transferred, and even sold several times. Regarding the personnel team, some bosses take the old team away, while some bosses leave the team intact and require the new boss not to dismiss old employees within a certain period. 5. Sell directly or after rectification and packaging? Some bosses are impatient, tired of the business, and want to sell as soon as possible, not wanting to keep it for a day longer, wanting to get money early to enjoy life or invest in new fields. However, haste makes waste. The more anxious the boss is to sell, the more cautious the acquirer is, always afraid of falling into a pit. Even if sold, the acquirer will try hard to lower the price, or pay in installments, or tie the company to the new company, and let the boss work for the new company for a few years in the form of employment to strive for a smooth transition. Objectively speaking, whether the company is to be continued by the boss or sold when there is an opportunity, as the boss, there are a few points to consider: **1. Establish the concept of company market value** Although the company is owned by the boss, the value of the company, that is, how much the company is worth, should still have an evaluation concept. Whether to sell or not can be discussed later. At least, the boss should have a rough idea of how much his company is currently worth. **2. Composition of company market value** Historical performance and profits are the most basic components, but behind performance is the operation system, and behind profits is the management system. **3. Acquisition evaluation** You cannot see your own problems. Even if the boss created the company with his own hands, he may not be fully aware of the current problems. Employees may know, but they may not say. If an acquirer comes, they will definitely point out the problem points during the overall evaluation, which are the problem points affecting the company's market value. These problem points are the company's shortcomings and the direction for future rectification and improvement. **4. Company rectification with the premise of selling** Although bosses know that companies need regular cleaning and rectification, upgrading and strengthening, in normal times, the determination and execution of rectification are limited, and various company reforms often end up anticlimactic. If the rectification work is oriented towards selling the company, it is expected that the determination and execution should be fundamentally improved. **5. Necessary packaging** Service institutions, circulation institutions (distributors), and other companies with a low proportion of fixed assets have large price flexibility during acquisition evaluation. Since you are selling the company, of course you want to sell at a good price, so you need to carry out advance cleaning, rectification, and packaging, such as clearing historical legacy issues, perfecting rules and regulations, cleaning, classifying, and upgrading customer resources, optimizing product structure, keeping the office and warehouse environment clean, and having complete job descriptions and on-the-job training systems. At least, others should be able to operate smoothly after buying it. The author, a private enterprise owner, has managed a family distribution company for many years, during which he also served as a business manager and trainer in several production enterprises. His research direction is internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend construction, and veterans entering private enterprises. He continuously breaks down over 400 topics related to internal management of private enterprises and keeps updating material collection and solution updates. **The 3rd (CFIC) China FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology" and invite domestic **1000+ distributors, 500+ brand owners, 200+ founders of B2B platforms, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-border integration! **Core topics of this conference:** > * How can the FMCG industry achieve new growth opportunities through B2B > > > > > > > * How to build a new supply chain behind new retail > > > > > > > * How can intra-city logistics help B2B achieve leapfrog development > **Highlights of this conference:** > * The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper" > > > > > * Sharing of excellent transformation and upgrading distributor cases > > > > > * Conference + exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens docking > > > > > * Alibaba Retail Link, ProLogis Finance, Eternal Asia Supply Chain, Best Store Plus, Yijiu Pi, Haiding, and other well-known enterprise leaders in various fields will give on-site speeches and express pioneering views. > **November 8-9, 2017** **Chongqing Yuelai International Conference Center, Xinyue Hall** **Registration channel is now open. Long press the QR code below or click "Read Original" to register.** Add friend and note "Conference Registration" Click the link below to review the highlights of the first and second FMCG + Internet conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671