"Change Is In The Wind" In Business Selling

With the overall economy perched on what we all hope is the precipice of recovery, would-be sellers who have contemplated exit, are waiting for the day. As lenders begin to become more confident, and investors find their balance once more, merger and acquisition activity is likely to soar. In fact, such surge may be so powerful, from pent up demand and from the raw magnitude of baby boomers seeking exit, that markets for sale could once again shift, from powerful demand with few sellers making their move, to an opposite field with very plentiful counts of sellers at the ready.

Owners who may have been just fairly "close" to consideration of exit, a few years ago, have now started to worry that they might have to wait far longer than they intended. Numerous sellers, who were close to sale one to two years ago, have waited. They waited because a) their earnings were dropping -- and they know you can't sell a business for maximum price when earnings are off, b) they worried about lack of velocity of corporate buyers, due to lagging performance and thus greater need for caution to keep shareholders comfortable, and c) they heard about lack of credit, and worried about the impact that such tightening might have on buyers in the M&A marketplace.

All of these were legitimate and appropriate concerns, and good reason for delay. However, as the market begins to open up a bit, with perked up earnings streams, and new credit alternatives, the extreme slow-down of the past two years could cause a burst of seller availability, and afar less seller-advantaged supply and demand mix in the marketplace, than any we have experienced in the past 20 years.

John Lewonetti, managing director of Pinnacle Equity Solutions, told Boomer Market Advisor two years ago that the number of retiring business owners is expected to grow from 50,000 to 750,000 by 2009. That's an increase of 15 times, stemming from raw demographic counts of older owners likely to retire. Neil Shroff, managing Director for Orion Capital Group conducted a survey which they reported on in November of '08, which validated this analysis with the finding that almost half of business owners 55 years and older said they want to sell their businesses within the next three years. The Exit Planning Institute says that over the next 15 years, eight million business owners are expected to exit their companies. All of these facts and statistics point to an enormous surge in business sale activity to come, and some likely new market dynamics that may have impact on owners wishing to sell over the next decade. A substantive surge in available sellers on the market, will allow buyers to be more selective, and thus make it tougher for sellers in years to come.

For owners who may likely wish to sell within the next 5 years, there may be significant advantage to moving earlier instead of later. If you find this thought worth consideration, and you'd like some sense of value that you might be able to achieve today, don't hesitate to call and ask for a salability analysis from our firm. We do three such analyses per month, at no charge, as an investment in our future and yours. The net product is a brief inventory of your strengths and weaknesses for possible sale, and a short punch list of key elements of value to work on, in building value for the future.

For us, it's a way to get to know prospective clients ahead of a potential sale date. It's also, we hope, a way to make those prospects stronger and more ready for sale, when the day comes.

The more you can do today, to solidify values for the future, the greater the reward may be when you are ready to move forward in sale. Think. Read. Prepare. It may pay literally millions of dollars in dividends to your value.


Deborah Douglas, Managing Director and Author
DouglasGroup.net

'Ripe: Harvesting The Value of Your Business'
'Cashing In! Selling Your Company for Maximum Price'