It may come as a surprise that many business owners fail to realize that the time to sell their business is when the economy is booming and at its best. With low interest rates, low inflation, and consumer demand at an all-time high, a business will often sell at a higher price than when times are not so good. So if you've considered selling your business, for whatever reason, maybe you should sit down and analyze the benefits of selling now, rather than later, when times may not be nearly so good.

• Investment funds are available. Because of the healthy economy, ample investment funds are available in the capital markets to help finance profitable, well-managed businesses. IPOs (initial public offerings), reverse mergers, leveraged buyouts, strategic acquisitions—you name it—are just a few of the many creative ways deals are being put together these days. These are strong indicators that buyers are in abundance and eager to acquire their first acquisition, or to expand their existing holdings.
  
  
• Downsizing can work in your favor. For some time now, many companies, especially larger ones, have aggressively downsized, leaving thousands of managers and executives out of work. Many of those dismissed workers, as well as those that still have jobs, are looking for business acquisition opportunities. Many of these former and currently employed workers have the necessary skills to succeed in their own businesses. They also either have the capital resources to buy a business independently, or the right contacts to collectively make acquisitions.
  
  
• Find qualified buyers through a broker. Sellers often turn to the business broker, or intermediary, to find financially capable and motivated buyers. With so many buyers seeking acquisitions, the broker can play an important role in screening out those who are just "tire-kickers," financially unqualified, or not truly motivated to buy a business. Once fully qualified buyers are identified, the broker can play a vital role as a negotiator and facilitator by bringing the buyer and seller together to complete a successful transaction benefiting both sides.
  
  
• Beware of burnout. If you're a business owner who no longer finds it fun to run your business, maybe it's time to sell. If you find you're simply "going through the motions," you may be suffering from long-term effects of unrelenting business demands required to keep your business running day after day, year after year. The warning signs of burnout also include a feeling of boredom, isolation, lack of concentration, loss of perspective, and a tendency to put off critical business decisions. The most important point is to be able to recognize these signs early and to do something about them, before they seriously impair the success of your business. One solution may be to simply "cash out" and do something else.
  
  
• Don't wait too long. Besides burnout, there are other important factors that can seriously impair the sale of your business. A sudden change in economic climate, resulting in high interest rates and inflation, can really put the brakes on selling your business at the price you desire. Other factors—such as failing health, divorce, a death in the family, loss of key personnel, product obsolescence, arrival of severe competition, lack of capital, lack of family members to take over the business—are examples of how the value of your business can be adversely impacted, suddenly resulting in the possibility of a forced sale.

Your ability to present a successful, growing, healthy, and profitable business to buyers is a major consideration in maximizing the value of your business and completing a successful sale. But perhaps the most important consideration is to simply not wait too long to let go of the reins and sell out. Otherwise, you could be left "holding the bag."

Send this article to a friend

Authored by: Robert E. Bunn, MBA, Robert E. Bunn and Associates, Acquisition and Management Consultants, Cape Girardeau, Missouri
Source: Creating Quality Newsletter, Volume 10, Number 1, January 2001

go back

Newsletter archives: 2004 | 2003 | 2002 | 2001