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You want to beat the rush
You’ve heard about the baby boomers. They’ve started to retire in a big way. Some of them are business owners, which should mean that there will be a lot more businesses out there with “for sale” signs hanging on them. Simple supply and demand suggests that this might depress valuations.
You don’t want to “fight” again
I’ve spoken to a number of business owners who had to fight tooth and nail during the Great Recession. Through a combination of business smarts, hard work and sheer willpower, they’ve survived. They’re proud of their efforts, but they’re tired. They don’t relish the thought of going through another downturn. I think that’s a pretty good sign that it’s time for a graceful exit.
You were ready before
Last month, I spoke to the owner of a specialty manufacturing business. He told me he was mentally ready to retire several years ago, but then the Great Recession hit, and he put his plans on hold. Now that things have turned around and his company has returned to growth, he’s thinking about retirement again. If that scenario sounds familiar to you, it might be a good idea to follow his lead.
You’re wary of taxes
Massive federal deficits are an ominous sign for high-income earners and wealthy business owners. Governments will have to pay for all the stimulus they’ve been spending, and there’s a good chance they’ll be looking to high net-worth individuals and owners to do it. (Example: President Barack Obama’s recent plans to increase taxes on the wealthy.) Depending on your situation, selling now before it happens here might make sense.
You own a business that private equity might be interested in
The Great Recession was hard on private equity firms. Many turned in fine performance, but when it came to raising new money, times were tough. Many firms have a “five-year window”: they have five years to invest money, otherwise they have to return it to investors. If you operate a mid-sized business (i.e., over $1 million EBITDA) in an area that private equity is interested in, selling now could help you capitalize on the pent-up appetite for deals.
As an aside, even if you aren’t interested in selling now, you might be interested in knowing how sellable your business is. Our complimentary “Opinion of Value” report can give you and idea on how attractive your business is to a potential buyer, and we will also give you some suggestions on how you can improve your metrics.