Knowing When to Sell Your Business and Getting the Best Price

Hoffman Estates business lawyerThere are many reasons that may lead a person to start a business. Some individuals feel that they are best suited to work for themselves rather than for someone else. Others have a passion for their particular field or industry and are happy to dedicate their professional—and often personal—lives to their craft. Still others are simply entrepreneurs looking to build a company from the ground up and then sell the company for maximum profit at exactly the right time.

As a business law attorney, I understand that profitability is a great motivator. I also realize the importance of knowing when to sell so that you can get the highest return on your investment. Consider a fairly well-known example:

From Razor Startup to Household Name

About nine years ago, entrepreneur Michael Dubin released a YouTube video that made fun of the hassles that many men endure related to shaving. The video targeted both the discomfort and the expense involved in maintaining a properly groomed look. At the same time, he announced the creation of Dollar Shave Club, a subscription service that offered mail-order disposable razors and replacement cartridges for as little as $1 per month.

Fast forward to 2016 and a point where many people claimed that Dollar Shave Club’s products were inferior to the big name companies like Gillette. Despite having more than three million subscribers, representing about 5 percent of the men’s razor market at the time, the service was not yet showing a profit.

In July of 2016, however, European consumer products group Unilever announced its intentions to buy Dollar Shave Club in a deal that would eventually net Dubin about $1 billion in cash. For his part, Dubin stayed on as CEO of the service, which continues to operate as a subsidiary of Unilever. Dubin left Dollar Shave Club just last month saying that he was glad he stayed for as long as he did. He also acknowledged that Unilever delivered on its promise to let him run Dollar Shave Club, as well as its promise to provided the resources needed to expand.

Both Dubin and Unilever declined to talk numbers last month, but Dubin did say that the service has grown each year and continues to grow. A report from 2019 indicated that Dollar Shave Club had over 4 million subscribers, but the brand has expanded to be more than a subscription service. Today, you can find Dollar Shave Club razors, shave butter, and other grooming products in Walmart stores across the country.

Is Now the Time?

The Dollar Shave Club deal serves as a strong example for business owners who are looking to sell a startup of their own. Sometimes, however, an owner may not have started with the intent to sell, but the industry environment and health of the company could make selling a very attractive option. Experts suggest considering three things if and when you are thinking about selling your company:

  • Value: Have you maximized the worth of your business? Could selling it—or selling a part of it—allow it to become even more valuable? If you are being offered cash or other incentives, selling could be your best move.
  • Risk: Over time, you may become tired of taking risks. As your company grows, your exposure often does too. Selling your business could afford you the security and protection you need, and, with the right terms, you can remain with your company and continue to focus on your interests.
  • Change: Are you ready to move on and do something else—possibly even retire? Starting a business does not mean it has to control the rest of your life. There is nothing wrong with selling to get the freedom to find new experiences.

Let Us Help

If you have questions about selling your company and how to get the most out of your business investment, contact an experienced Naperville business law attorney. Call the Gierach Law Firm today at 630-756-1160. We are here to help you find the solution that works best for you.






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