By Jon Holbert
These questions come up often in conversations with business owners. The answers are unique to each individual owner, but there are some constants that I’d like to address.
1) Why Sell?
a) Retirement. Even if you are technically not “retirement age”, business owners are often motivated by the desire stop working full time in their own business. Some will work part time, work for someone else or even begin a new business venture.
b) Health Issues. Many business owners are forced to sell because their health will no longer allow them to work in the business.
c) Interest. Many owners have lost interest in their current business. Let’s face it. Working in your own business can be grueling at times with long hours and lots of stress. Other times business owners have other businesses or interests that require more of their time. FYI— golf and fishing are not other interests, refer
to section a.
d) Timing. Many times if a particular business is the hottest thing going or if it is on the upswing, the timing may be right to get a great price for your business. Sometimes you just have to strike while the iron is hot.
2) Why Now?
a) Market Conditions. No one can predict the future, if you are considering selling, the only time you can be sure of the market conditions is now. As Yoda would say “Difficult to see. Always in motion is the future.” Many times we see owners postpone selling their business and then have some catastrophe or market shift that makes their business worth less or worse, worthless.
b) Taxes. There are some things that are predictable, especially in today’s climate. Those things are higher taxes, more government regulations and intervention. It seems inevitable that there will be a capital gains tax increase in the near future as well as additional regulations concerning employee benefits, environmental regulations and income taxes.
c) Trends. As we slowly recover from the 2008 recession, most businesses are beginning to experience upward trends in sales and profit and these are the trends buyers are looking for. Any business that has survived during the last 5 years has proven itself to be resilient and flexible in dynamic markets.
d) Buyers. With some larger companies downsizing, some retirement age people who aren’t ready or able to retire and with tight job markets for recent graduates there are plenty of willing buyers out there. The question is—are they capable of buying a business? The answer is—yes, many of them can. Now that people can invest their 401k into their own business without taxes and penalties, the door opens for many. Also, recent graduates or younger buyers can buy themselves a job with help from their families.
Using a business broker can help you determine if the time is right to sell. He or she will be up on current trends and market conditions. He or she will carefully screen buyers so that only qualified people will “see” your business and can help with recommendations for valuations and tax consultants.
Ultimately, only you can decide when the time is right to sell your business, but it just makes sense to use a professional business broker to provide confidentiality, insight into the market, bring you screened buyers and provide the consultations you need to make an educated decision. Once again, Master Yoda says “Already know you that which you need.”