Good Time To Sell

Most news for small business owners isn’t so hot. Business owners believe that waiting out the economic storm and their retirement is a prudent fiscal move. While this notion has merit, awaiting better economic times does not necessarily ensure higher value(s) when the business is sold.

The unfortunate reality is that in many instances value deteriorates due to external forces (economy) as well as internal forces (the business owner). There was a study a number of years ago that suggested that an owner actually becomes less effective over time (7+ years) as the original enthusiasm wanes. As business owners approach retirement, it is not unusual to see a decrease in revenue and profits as the business begins “retiring” before the owner does. The result is that the business owner may delay retirement but not increase value equity.

The sale of a profitable company in this environment (or any other) is a viable strategy for business owners who are committed to sell. Value is a very fluid and timing often makes a difference in acquisition prices. Quality sells in any economic environment and profitable, motivated, flexible businesses that are properly positioned are still in demand.

Despite the economic conditions, limitation on credit, and changes to government backed loans, which are forecasted to continue for the near future; we have not experienced a significant slowdown in buyer inquires. However, over the last six months we have noted the following:

• Displaced “blue collar” buyers are seeking to “buy a job”
• Middle management individuals caught in layoffs are utilizing severance or their own 401(k)s to invest in going into business for themselves. Alternative investments such as the bank or the stock market are not nearly as attractive as they once were.
• Strategic (or synergistic) buyers and Private Equity Groups (PEGs) are actively seeking add on or platform acquisitions.

The Business Brokerage Press cited that the business value for most owners equates to approximately 75% of their net worth! This is a considerable statement when evaluating the time to sell and price positioning. Our experience is that planning is key to maximizing value. We have had clients who we started dialog with years ago who heeded (and some not) our advice on the necessary preparations and will fare well as we begin confidentially exposing their business to the marketplace.


For More Information Please Contact:
Ed Mysogland
Managing Partner
317-218-8616
emysogland@sunbeltindiana.com