When investors sell businesses on the cheap

INVESTORS are not supposed to sell businesses for free. That happens when they sell their shares for only the net cash on the company's balance sheet, or less.

They effectively get back the money sitting in the bank that was due to them anyway.

But they give up the potential of invested capital. By selling at net cash, they are ascribing a value of zero to hard assets like inventories and receivables, and soft assets like technical know-how and client relationships. All these are ingredients for future profits.

This sad state of …