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Who actually decides whether and when you sell your company ??

Without straying too far in the direction of how much control board members and shareholders have over one another basically the Board of Directors, of which the head is the Managing Director, controls the company for the benefit of it’s shareholders.

Typically the Directors are also shareholders ( but not always ). Often Business Angels and Venture Capital investors will have the right to or an actual  place on the Board of Directors as an executive or non-executive director.

Usually the Managing Director or a majority of the Board of Directors will make the decision to sell or float.

Directors and shareholders with more than 51% of the shareholding of the company can probably force a sale or float.
Depending on the shareholders agreement and the articles a smaller amount of shareholding may be able to force a sale or float.

It is often the case that some of the Directors and shareholders want to sell and some don’t. The reasons why people want to exit or don’t are often very personal and perhaps, for example, related to their age or need or desire for cash.

Often people who do not want to sell when the idea is first mentioned are glad they did when it is all over.
The point is that making the decision to sell is often a complex process and sometimes people who think that they have the authority to decide on an exit actually don’t.

Perhaps the simplest situation is when a company was started with the clear objective of selling after an agreed period of time. In this case, hopefully, investors and Board members are aligned in their thinking and stay aligned up to the point of exit.

Hopefully people can be honest and straightforward in their views, desires and aspirations and a solution can be worked out but unfortunately this is not always the case. Boards and shareholders can be deadlocked and even lawyers involved. Typically this is in nobodies interest ( other than the lawyers ) and so should be avoided if at all possible.


This blog post is a part of a series of posts describing The Sales Process – you can access the other parts of the series from the links below:

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