Why Sell Your Business Right Now?
Today, there are between 5 and 10 buyers for every business for sale1.
Needless to say, it is very much a seller’s market when it comes to established private businesses. The growing number of people interested in buying a business means more activity and more competition per listing - all of which favors the seller. Imagine listing your business for sale and having multiple people competing for the price, terms, and overall structure of the deal.
A large population of buyers exists around the world that want to buy into established, private businesses - and why not? These businesses have thrived through thick and thin, and have lasted the test of time, all while continuing to generate returns for stakeholders. Who wouldn’t like to own a business like this?
Is Your Business Ready to Sell?
At the end of the day, neither buyers nor sellers want to waste time or money. So before you begin the process to sell your business, make sure you are serious and that you are ready.
While it is a seller’s market, sellers must remember that while buyers are plentiful, they are also sophisticated. Sellers need to ensure they have their businesses in order and are ready to sell if they want to maximize the selling price. Ultimately, the goal for both parties should be a smooth handoff to the buyer from the seller.
Buyers, on the other hand, need to show that they are qualified to purchase a business. They need to be able to show that they have the appropriate funds to buy the business outright (rare) or can obtain financing. The idea of qualification, however, extends far beyond the topic of a buyer's financial statements. In order to successfully run the business post-closing date, prospective buyers must understand the business through and through, understand the opportunity it presents, and understand the events and timing aspects of the transition period.
More and more people now realize the financial and intellectual opportunities that come with buying an established private business. There are many great opportunities that exist for buyers to find excellent businesses and for sellers to maximize their return on investment by creating and building a strong and valuable business.
This post is not a knock against startups. Startups are well-liked and a big part of the business scenario. Daring, dashing, and brave by nature; many have gone on to change the world for the better. But the reality is that startups are not for everyone.
The point is: when it comes to cash-flowing, revenue-generating, financially healthy entities, a lot of people lean towards the stability of established private businesses. This asset class has often been overlooked as being a ‘smaller basket’, but this is far from the truth. Private companies hire just as many people in the United States as public companies. Many of these private companies are established small-to-medium-sized businesses.
A burgeoning population of younger prospective buyers coupled with an international appetite for American investments makes the pool of able buyers plentiful. The connectivity of the internet created worldwide competition for these valuable assets.
The time to sell your business is now.
1 Tresle, Inc. Data & The Business Buyer Resource Center. Last Updated July 2019.