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The dilemma of entrepreneurs

December 11, 2018

 

In order to carry a business, entrepreneurss have to make a lot of decisions. One of them is to “ cash out” or to maintain ownership and concentrate on increasing revenue for bigger profits. Whether the answer is yes or no, founders must assess who to sell shares to- who would be the right partners? As well as what portion of the company should they offer?

Reasons for selling equity

Most and foremost, the company wants to monetize the business. This can be explained by generating capital to develop the company or the fact that the founder is fed up with running the business forward by himself. A small enterprise run single- handedly by Maureen Kelly which is called New York based Tarte Cosmetics offered cheek stain product featured by beauty writers. However, only when the brand ended an acquisitions deal with the Japanese Kose Corporation did Tarte Cosmetics really take off.

It takes time to create partnerships, therefore, founders should establish strong working relationship with their investors and see their business changes/ Ph: Tartecosmetics.com

When the company have to sell?

This activity often happens when the company is already in financial distress. The lucrative investors are interested in labels demonstrating signs of great potential for development. Thus, advisors recommend that company founders should take all those offers into consideration, even if the offer comes when the leader did not have the intention of selling his company.

Who will buy?

The founders’ intentions will point out which partners are the ideal ones for their company. Strategic partners will enable growth and expansion of the company while semi- strategic ones will provide experience or contacts to guide the company in particular areas. Financial investors buy to sell stakes in brands which are forecasted to acquire value quickly while private investors and family offices give some guidance and strategy for growth but do not usually look for long- term corporation.

In conclusion, the dilemma of entrepreneurs will become easier if they are wisely enough to choose the right time to sell, the right investors to purchase  and the right partnership to work with in securing successful business for the company.

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