For the first time in a long time, the market is shifting in favor of business owners looking to sell. According to BizBuySell Insight Reports, small-business sales were up 49 percent in 2013 compared with 2012, and growth is expected to continue this year.
According to BizBuySell, which analyzes the sales and listing prices of U.S. small businesses nationwide, brokers reported 7,056 small-businesses transactions last year, up from 4,730 in 2012. The greatest number of sales in 2013 occurred in the restaurant and retail industries, which saw 78 percent and 71 percent growth, respectively.
Consider the Economy
What makes now a good time to sell? Owners have been waiting to jump at the opportunity, explains Ted Coiné, co-founder of Switch and Shift and co-author of the forthcoming A World Gone Social: How Companies Must Adapt to Survive.
“As the economy heats up, the hard-found gains of founders over the Great Recession are finally being reflected in the value of the companies they and their employees have built,” Coiné says, adding that it’s “only natural” some of these company owners are taking action as the market improves.
The dramatic increase in small-business sales may be a reflection of a “pent-up desire to sell,” Coiné says. With the market in a shambles from 2008 through 2011, anyone who was looking to sell couldn’t do so with a sound mind, he asserts. Now all those business owners who wanted to sell but couldn’t are taking the plunge and clearing out the backlog, so to speak.
Seek Advice, Ask Questions
Just because the marketplace has improved considerably doesn’t mean you should jump into the fray. According to Coiné, it’s important to “get experienced, professional advice” from two types of sources: People who used to be in your industry who’ve sold their companies before, and business brokers who have sold companies similar to your own.
When choosing professionals from which to receive advice, Coiné recommends being cautious: “Anyone who gives you advice without asking why — and then asking it again, and again, five ‘whys’ deep — isn’t very good at giving advice. Beware.”
After getting valuable, solid advice from those who know what they’re talking about as it relates to your industry, Coiné suggests asking yourself these additional questions:
- If you hold out for a couple of years before selling, would that be a better alternative?
- What’s your next step?
- Will you be able to retire on this money?
- Will you want to?
- Will you use the money to start a new business? Invest in other businesses as an angel? Play the markets? Beware of the latter two, Coiné says, because business builders are not the same as investors.