EMERY ELLINGER
BUSINESS BROKERS
babm.com/businessbrokers
26 | NOV/DEC 2011
So you have a profitable business despite the economic downturn. That’s great! However, you may want to sell your business within the next five years.
The question you may be asking is, “Do I sell now or wait for the economy to recover first?”
Common sense would lead you to believe it is better to wait because your selling price may be low. This is a solid concept in most cases, but does not always apply to selling a business. In fact, recent trends and studies show that now could be a better time to sell your business.
Important Trends One major trend to consider when moving forward on selling your business is the aging of the baby boomers. As the baby boomers begin to hit retirement age, more and more business owners will be looking for an exit strategy. The best projection to really drive this point home is from the Exit Planning Institute. They expect roughly 8 million private U.S. companies to sell over the next 12-15 years as a result of baby boomers reaching retirement age. That is a staggering number and will only increase the difficulty of making your business stand out to an investor. There is only so much capital available for investment in businesses; don’t wait too long and get lost in the crowd of business sellers. Another thing to look at is why the current supply of businesses is not meeting the demands of investors.
We can start by evaluating two simple statements. In an economy characterized by low growth and high unemployment there are fewer profitable companies.
Investors normally prefer to commit equity to profitable businesses.
is now a good time to sell my business?
Combining the two statements tells us there are still a lot of investors out there competing over a smaller number of profitable businesses. If you are profitable now, why wait for a thriving economy when there will be a larger pool of companies from which investors can choose.
The Myth of Selling Low
The next thing to clear up is the idea of selling low when it comes to businesses. It is certainly possible that an owner can sell at the wrong time and get less money than he should have.
The most obvious example is if your profits have taken a major hit in the past few years. If you believe your profits will rebound in the near future it is a good idea to hold off on selling. Investors are not going to pay for success from several years ago. They are most interested in financials from the past 3 years and what growth trends your company is exhibiting.
The important thing to remember when selling your business is that you will receive fair market value based on recent performance regardless of the state of the economy.
Emery Ellinger is Chief Executive Officer of Aberdeen Advisors, Inc. Aberdeen Advisors is a team of highly successful merger and acquisition specialists that assist business owners in selling their business. Emery has directed over 50 mergers, acquisitions and financing transactions. Emery is one of the top ranked Merger and Acquisition experts in Florida. You can reach Emery at:
aberdeenadvisors.com
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