These signs may hold the answer…
Have you been thinking about selling your business but just can’t decide if now is the best time? Are you repeatedly analyzing the economic situation and wishing you had a crystal ball? There are positive signs and there are negative signs….
Still can’t quite decide whether or not to embrace your Life Beyond Business?™
Here are 6 reasons you might want to consider that it’s time to sell your business:
1. You’re less interested in fighting the good fight
Many business owners took the Great Recession in the teeth. If you’ve stabilized your business and the possibility of having to fight through another recession leaves you panic-stricken, it may be time. You know your business needs investment, innovation and a fresh creative approach, yet you just don’t have the energy.
If that’s the case, seriously consider transitioning the business to those who do have the drive to sustain profitability. Otherwise, the business may lose value in future years due to your apathy and jeopardize your retirement.
2. The worst is behind you
Let’s say you were mentally ready to consider selling several years ago and then 2008 hit; 2009 was bad; in 2010 and 2011 you made cuts and adjustments; since then you’ve been making some strides and now you’re finally starting to see some profit and revenue growth.
With your numbers going in the right direction, now might be the right time to make your move.
3. The taxman is coming
The government will be looking for money to fund the cost of an aging population. Healthcare, deficits and entitlement programs will mean increased taxes and regulations. You may not want to be the leader of the changes that are necessary to adapt to more regulation and higher taxes compressing profits.
4. Nobody is lucky forever
If you’re fortunate enough to be in a business that actually benefits from a bad economy, congratulations… you’ve probably just had the best years of your business life. But no cycle lasts forever and right now might be a logical time to take some chips off the table.
5. The coming glut
As a business owner, demographics are not on your side. As baby boomers retire in droves, we will have a glut of small businesses coming on the market – great for buyers, but if you’re a seller, you may want to avoid the flood and head for higher ground now.
6. The closing window
Since 2008, private equity companies have had difficulty raising money; many firms had their last successful round of fundraising a number of years ago. Many funds have a five-year window in which to invest or the money is returned to the funders. Some boutique private equity firms will invest in companies with $1 million in pre-tax profits (larger private equity firms will not go below $3 million in EBITDA); so if you’re in the seven-figure club, you could get a bidding war going for your business among private equity buyers keen to invest their funds before they have to give it back.
Unfortunately there is no magic way to know the best time to transition out of your business
This is a personal choice only you can make.
Trends and demographics can also provide signs to support your decision of the best time to sell your business.
One thing to remember…