10 Years After the Financial Crisis, Selling Conditions Are Right
by Dave Driscoll
Remember the fear of revenues dropping like a rock? Remember the anxiety of wondering whether you and your business would survive? Remember those difficult decisions you had to make regarding employees?
Those challenging moments likely also created fear that you may never be able to sell the business and enjoy what you waited so long to achieve, your life beyond business!
If your business survived the 2008 economic crisis … well done!
Based on my experience as a business owner and a business broker advising sellers, now is the time to consider selling if that is your objective.
Those of you who may have been considering selling your business before the financial crisis are 10 years older now … 10 years farther down the road and closer to the point of wanting to do what you want, when you want.
These positive market conditions may help you make a decision if you are considering the sale of your business:
• There are buyers in the market. Whether they are younger entrepreneurs, corporate burnouts or folks who finally see a future with enough economic stability to take the risk, the buyers are willing.
• Your business may offer a solution to help another owner grow his/her business as well as provide additional employees to supplement a shortage of quality workers.
• Money is available for buyers. The lending market is very competitive, with many lenders seeking quality deals for their portfolios. The Small Business Administration (SBA) is very active in assisting buyers with the loan guarantees needed to acquire a business, and many preferred SBA lenders are looking for deals in the St. Louis market.
• If your business’s historical financials now show multiple years of stable or growing cash flows, the supporting solid multiples should translate into an attractive selling price.
• After enduring the 2008 financial crisis, you may be more willing to finance a small percentage of the transaction to assist a qualified buyer, which can support a higher selling price and expedite your journey to your next gig (retirement, buying another company, investing, consulting, volunteering, etc.) .
• Interest rates are very reasonable, and lenders such as the SBA are offering longer amortization periods and creative deal structurers to help qualified buyers.
No one can determine the absolute best time to sell your business, but market conditions can provide guidance. Business cycles are a significant part of your life as an owner, and the current market is good for most sellers. It is always better to sail with the wind than against it, and in today’s market, the wind is in the seller’s favor.
As I have mentioned in previous articles, you must allow the buyer an opportunity to recover the investment he/she made to purchase your business. In my opinion, an owner should try to sell the business two-thirds of the way up the business cycle, giving the buyer an opportunity to make money while also offering the seller the best shot at a solid sale price.
This is the best market we’ve had in 10 years — is it your time to achieve your life beyond business?
Dave Driscoll is president of Metro Business Advisors, a business brokerage, valuation and exit planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at DDriscoll@MetroBusinessAdvisors.com or 314-303-5600. For more information, visit www.MetroBusinessAdvisors.com.
Submitted 5 years 303 days ago