Economic Downturn | Sale of your Business | <5 Years
What does an economic downturn mean for the sale of your business over the next five years? That’s a question we get a lot. Simply put, it would mean that your business both becomes less sellable, and likely worth less, if nothing else changed. This isn’t great news, but if you recall the last major downturn was over 13 years ago. Statistically, we’re due for a major downturn in the economy. Many experts believe it’s looming more than ever. Multiple leading indicators point to a recession within the next half decade, such as interest rates, inflation, the labor market, and the recent volatility in the equities markets.
What can you do as a business owner?
Not selling within 5 years?
Time to batten down the hatches. Become leaner, quit extravagant spending, and focus on the quality of earnings. Diversify customers and possibly your product/service offering. Have some cash/savings set aside in case you have to ride it out for a few years (like 2008).
Selling within the next 5 years?
Good news, it’s still a major SELLER’S MARKET. Businesses for sale are still getting premiums while buyers look to acquire thin inventory. Have a healthy business in a top industry? Those are going for even higher.
It’s counter-intuitive that most business owners don’t want to sell when their business is doing well. Many business owners are making more than ever, so why would they? Well, buyers only want to acquire healthy and profitable businesses. The more it is, the higher the interest.
A million-dollar business in a good market becomes a half million-dollar business in a bad market… With all other factors saying constant.
CBA helps business owners net-the-most when selling their business. We aggressively protect your confidentiality while expertly negotiating your business price, business payment terms, and post-close tax implications. Most advisors cover one or two of those, but rarely all three.
Let us give you an idea of what your business is worth… you might be surprised. If you’re over five years out from selling, you may want to hold on for the ride. If you’re possibly less than five years out, you may want to reach out to us today at 858-216-1637.
Aaron Thom
President | CBA