Around the Web: A Week in Summary
A recent article from BizBuySell entitled “The Market is Hot: Retiring Baby Boomers and Rising Revenues Fuel Record Small Business Sales” discusses the effect retiring baby boomers are having on the current market and the outlook for the future.
Business sales are at a record high within the first two quarters of 2018. The growth in the market can be attributed to baby boomers exiting their businesses and favorable business financials. Asking prices are increasing, buyers are entering deals with better financial footing and the state of the market overall is on the up and up with benefits on both sides.
With baby boomers owning the majority (53%) of small businesses, and almost 60% of them planning to sell their businesses within the next two years, the market is predicted to remain favorable for the next few years. However, experts warn that the effects of the change in immigration laws and the trade war with China are yet to be seen on the market.
A recent article from Allan Taylor & Co. entitled “3 Reasons You’re Not Building A Sale-Ready Business” walks through the three most common reasons a business owner avoids doing the work to make their business sellable, and why you should do it anyways.
These reasons are:
- You think you’ll never sell your business. Seeing as we’re not immortal and things can change despite our plans, it’s important to have a sale-ready business to avoid an unplanned involuntary exit.
- Putting things off is human nature, especially things that don’t have an immediate effect on our circumstances. Still, beginning the process now can help improve the value of the business as well as help to avoid a stressful urgent situation down the road when it is time to sell.
- Being unsure of where to start. Instead of avoiding building your business to be sale-ready because you’re not sure how, start with one simple step: getting a business valuation. Having this done can not only tell you where your business currently lies value-wise, it can also highlight what you can do next to increase the value and sellability.
It may seem like a step that is not high on your urgency list, but starting now can make the process smoother and set you up for better leverage and decision making down the road.
A recent article from Axial.net entitled “3 Things to Consider Before Selling Your Business” examines key factors that affect a business sale, and how you can be prepared for them.
First, as a seller, you need to address the potential red flags that your business may raise to a buyer in its current state. Some of these things include revenue concentration, customer or employee churn, legal risks, too much dependence on any one person and excessive debts.
Secondly, be prepared for the sale process. You can do this by getting your financial records, legal documents and key historical metrics and the business’ growth plans in order. It’s also going to be important to assess your current mental state regarding the deal and make sure your company’s executives are all on the same page.
And thirdly, as a seller you’re going to want to build a team of professionals to guide you through the deal. Ideally your team will consist of a lawyer, tax accountant and sell-side advisor.
Even though 2018 is a prime year to be on the market, selling your business can still be overwhelming. Following these guidelines and being prepared can make for a much smoother experience when taking the leap.