It’s Business, And It’s Personal

Reasons to sell just one portion of a business

On Behalf of | Jan 3, 2017 | Buying & Selling Businesses |

North Carolina business owners might make the decision to sell a portion of their company rather than the whole thing. Selling a piece of a business is referred to as a divestiture, and it may involve the sale of one or more business units. Some businesses may also decide to recapitalize, or sell off a percentage of their shares.

The owner of a business may choose to do this for a number of different reasons. If one unit of a business is performing poorly, the owner may want to sell the weak unit in order to focus on what the business does best. Some divestitures occur after a business makes a bad acquisition that did not work out.

Because many business owners have all of their money tied up in their business assets, divesting is sometimes used as a method for creating more liquidity. Selling a portion of a business can allow an owner to partially cash out while retaining control of the heart of the company. In some cases, the parts of a business are worth more than the whole, so selling one part at a time can be more profitable.

Buying and selling businesses can get complicated, especially when a business is being divided into smaller parts and sold to different buyers. There are a variety of laws and regulations that must be followed, and both federal and state securities laws could come into play under some circumstances, so it could be advisable to have legal advice throughout the process.