The current economic babble may hinder some business sales, but even with a challenging environment, businesses are changing hands. Regardless of the economy, many aging boomers are looking to retire, while younger boomers, Generation Xers, and Millennials are interested in buying and becoming their own bosses.
This is the time when business savvy people don’t run for cover but actually dig in. While some business owners are hiding from the possible negative and money draining effects of the current market, there are those who continue to look to buy and are finding that deals can still be done.
Many business owners are concerned with the future and already have plans to sell in the next few years. They may be even more motivated to start the sales process now since fewer businesses are in the market now, but are selling as fast as in recent years. Buyers are discovering that business opportunities do exist and that regardless of the state of the economy, deals are being done, they may simply require some creativity.
Keeping perspective during turbulent economic times is essential. If your business has been impacted by the economy (and many businesses have), you have several options: first, you can hold hoping for better economics in the future, second, sell now given where the business is, or I suppose a third option is to simply give up and get a job. For those in the second category who are thinking of selling, remember, a business is worth what it is generating today. It’s not plausible to convince buyers that the business is worth what it will be generating two years from today, nor what it was generating two years ago. There may be some value attached to future performance that has already been generated if so a structuring mechanism like earn-outs can be negotiated to capture or participate in that future value.
If your business is currently healthy and is either stable or growing, it’s a great time to be in the market. We are experiencing a surge of interest from buyers – why? With the stock market either declining or static, investors including buyers, are looking for investment opportunities that will yield positive returns. The next one to two years may prove dicey in the stock market, but astute buyers know that business ownership is a great way to make their money really work.
Regardless of the reason, whether it’s retirement, ill-health, partnership dispute, divorce or plain and simple burn-out, businesses are changing hands for good reasons. Buyers are looking. The market may take many months to rebuild and become stable again. In the meantime, if you’re thinking about selling, it’s business as usual.
-Bradley G. Marlor MBA, CBI is a Managing Partner at Utah Business Consultants and a Certified Business Intermediary. Utah Business Consultants is a full-service Business Brokerage and Valuation firm.