One day, the day comes when a company owner decides to exit and sell their business in whole or in parts. Selling a company is a long process, which is often accompanied by significant difficulties. However, modern technology makes the process easier. Thanks to tokenization, it is possible to sell a business much faster and easier. In this article, the Stobox team, engaged in tokenization services in different industries, explores how tokenization works and what opportunities the tokenization of the company’s assets opens up during the sale.
Should You Sell The Company At All?
First of all, it is necessary to clarify an important point. Selling a company doesn’t mean that you cease to be a CEO. These are different events, and one does not imply the other. If you want to step away from operational issues, you can simply hire a new CEO. Conversely, you can sell the business but remain a top manager in your company.
There are two important aspects to consider before deciding to sell a business.
- Personal wish. For example, you may want to receive decent compensation for the years of hard work. You can get tens of thousands and even millions of dollars by selling the company. This would be enough for a carefree vacation or launching a new project that you dreamed about but didn’t have enough inspiration and time before.
- Business needs. In this case, you may want to sell not the entire company but only part of it. For example, if there is a need to get rid of specific divisions that do not fit your corporate strategy.
Why Is It Complicated To Sell A Business?
Imagine that you woke up this morning and decided to sell the company. Surprisingly, it won’t be so simple! Selling a business can take even years due to some complexities. Business owners who want to exit may face the following challenges:
- Search for a buyer. Buying a company requires a large investment. Even those investors who have sufficient capital will think about a purchase for a long time, so selling a business can take years literally. The more expensive the business, the more difficult it is to sell it.
- Negotiations on the value of the company. Even if you manage to find a buyer, they will try to reduce the price or achieve some additional preferences during the negotiations. The buyer will have a strong negotiating position since there are usually no competitors.
- Looking for a new owner who would keep all started projects. Many owners who want to sell the company remain emotionally attached and are looking for a buyer that would be able to develop all the projects that have been started. A conflict may arise due to a difference in the vision of the company’s prospects because the new owner may declare a different development strategy.
What Is Tokenization?
Asset tokenization is a combination of technical and legal processes that allows the transfer of ownership of any asset into digital form. This asset can be the company’s capital, debt, movable and immovable property, financial instruments, etc.
The transfer of data to the blockchain ensures the reliability and safety of all information. In addition, tokenization makes fractional ownership available.
The result of tokenization is the release of tokens that investors can buy during the STO. This is a relatively new type of crypto crowdfunding, which the Stobox company helps to conduct. Each token will correspond to some fraction of the value of the company. An STO is similar to an IPO and is also subject to regulatory oversight. However, unlike an IPO, an STO takes less time and costs less. And most importantly, with STO, the company does not become public. How can tokenization help sell a company?
- It becomes easier to find buyers. This is due to the lower entry threshold that fractional ownership provides. You do not need to look for one person who is willing to spend hundreds of thousands or millions of dollars. It is possible to divide the company into smaller parts and sell them to a large number of investors.
- A partial sale is possible. This way, you can raise additional funds by selling only a certain share of your business. Thanks to this, it is possible to keep a controlling stake, or some part of the company, by selling everything else. If you intend to stay connected with your business, then tokenization is a great option.
- There is no need to bargain with the buyer. Before the STO, an assessment of your business by experts is carried out, and a fair price is set, which is then divided according to the number of issued tokens. There is no bidding here, and interested investors buy tokens at a set price.
- The partial sale of the company to a few investors means that they won’t have significant plans for managing the business. That is, if you retain a significant stake in the company, all the negotiating power remains in your hands. Token holders will not be able to have a significant impact on your project. Plus, they usually don’t know each other since STO is held globally, and investors from different countries take part.
Summary
Selling a company is a complex process that can take from several months to several years. Whatever the reason you need to sell a business, you can speed up the process by tokenizing the company and dividing it into several parts represented in tokens.
Stobox has extensive experience in tokenization for its corporate clients. Some prefer to attract a few large investors; others are considering dividing the company into many parts turned into tokens for a faster sale. One way or another, the possibilities of the full or partial sale of a business become much wider with the introduction of tokenization. And this proves once again that new crypto technologies have direct application in the world of traditional finance and business.
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