The December 22, 2011 New York Times had an article titled, “Why Some Business Owners Think Now Is the Time to Sell.” The first example was about an owner whom wished she had sold in 2008 although she wasn’t emotionally ready at that time. Her business dived and is just now back to 2008 sales levels. One reason it’s back is that she purchased another company.
According to this article, “There is a pent-up pipeline of owners who have had to put off selling in recent years because of the economy. And now that many of these companies have at least one year of profits on the books, they are more attractive to potential investors.”
There are three categories of businesses that have put off selling. They are:
Companies where the owner believes the wave of economic recovery will let their business rise with all the others (they are probably mistaken; there’s a new norm).
Businesses that have streamlined their operations and have grown revenues organically and by acquisition (so they are in a position of strength).
Companies that weren’t affected by the recession; in my world this was primarily service businesses.
If you know of anybody even thinking of selling in the next few years recommend to them that they need to start now on doing the things necessary to stand out from the competition as there are going to be a lot of businesses on the market in the next 5-10 years.
“Many owners, especially the leading edge of the baby boomers, wanted to sell in 2008, 2009 or 2010 and would have sold in those three years had the economy stayed strong.” John Emory Jr.