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How Much Longer Should You Wait to Sell Your Business?

How Long are You Prepared to Wait?

How Long are You Prepared to Wait?

Many business owners have been putting off retirement in the hope that the value of their company will return to pre-recession levels. Is that realistic? Is continuing to wait a viable retirement strategy?

I was 56 last year. “Middle Aged” by any definition, and “Old” so far as my kids are concerned. I’m not getting any younger. Neither are a lot of the business owners I meet. Many have been ready to retire for several years but have been put off by the economic environment. In a lot of cases they are still waiting. Waiting for the recovery to be fully established before they test the market – but the fact is none of us are getting any younger.
 
How Long Before Company Values Get Back To Pre-Recession Levels?
 
It will take at least 3, maybe 5 years, of good figures to restore your business to the value it had before the recession hit. That is a long time to wait.

Let’s be honest with ourselves. The reduced value of your business was only part of the reason you put off retirement. The value of your investments and property were down as well. Interest rates have also been at record low levels, hitting annuity rates.

Well property values and the stock market have recovered in the UK, and interest rates are starting to edge up. Are you really expecting to wait until we have the perfect combination of business recovery, higher house prices, booming stock markets and better interest rates on savings before selling? How often does that happen?

There is no doubt in my mind that the high business valuations before the recession were driven in part by reckless bank lending. Memories are short, but with the continuing regulatory focus on restricting credit, I don’t expect to see bank lending on that scale again in my own working lifetime.
 
So What Is The Argument For Selling Now?
 
You may not want to sell until conditions are perfect, I can understand that, but its essential to think beyond that initial emotional thought process. Focus on a few practicalities. Ask yourself these important questions:

  • Do I really want to wait another 3-5 years or more for a perfect market that may never arrive?
  • There are a lot of business owners in the same position as me. What happens when all that pent-up supply hits the market at the same time? How big an effect will that have on values?
  • How much longer will I have to wait for the pent-up supply to clear the market and maybe values to increase?
  • Do I really think the banks are about to release a wall of credit to underpin higher business selling prices?
  • Can I really afford to bet on my energy and health holding up long enough to drive the business into the foreseeable future?

 
How Much Longer Are You Going To Wait?
 
At some point you are going to have to make the decision to sell, but how long will that be? How many more birthdays will pass before the climate is perfect to sell your business? Are you confident that when you do sell the market will be any better than it is now?

My personal view is that many business owners are working on because of a false view of the current market. We continue to sell businesses, and at similar values to pre-2009. Because so many owners are still holding back there is a dearth of good businesses on the market, and the ones that are being sold get a lot of interest. Owners testing the market are in general getting a pleasant surprise.

 

If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964 .

 
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