With global economic uncertainty caused by the Middle East War, it’s no surprise that business buyers and sellers are questioning the timing.
Is it a good time to sell – or should you wait until the conflict is over?
Whilst waiting may initially seem to be the best option, statistics tell a different story. Even during the COVID pandemic – and other uncertain periods – businesses were still listing and selling.
In the last few months, we have seen more buyer activity than ever, and deals are still getting done. In many cases, it’s better to sell while the business is strong rather than waiting and risking a downturn.
So, perhaps the key message to take away is that timing the market isn’t as important as selling when your business at its peak.
No Perfect Time to Sell
It’s important to remember that, firstly, external conditions are only one factor of your business sale or purchase. And secondly, there is no perfect time to sell!
Rather than focussing on external factors – such as market conditions and credit availability, consider the importance of proactive exit planning. In other words, when you focus on your long-term goals, you realise that market conditions are just one aspect of the plan.
Of course, market conditions affect sale prices – but that is a constant. There is no optimal time to buy or sell, because interest rates, trends, competition and overall market sentiment are forever with us.
The savvy buyer will be looking at the last three years of your business in terms of growth, stability, proven revenue and functioning systems.
Business Performance
Waiting until market conditions are 100% perfect could see your business start to decline and you could miss your window completely.
In short, it is all about business performance; a good business will find buyers in any market.
The time to sell is when:
- Your profits are healthy, and the business is stable and/or on an upward trajectory.
- You have clean financials and established systems in place that make the business an easy acquisition.
- You still have the energy and the motivation to lead the business through the due diligence and handover process.
Remember, when a business starts to decline, so does its value.
Positive Trends
The Middle East War is one worrying external factor. But consider these three positive trends currently affecting business sales:
- The ‘Silver Tsunami’: There is currently a huge wave of Baby Boomers selling their businesses – with about 50% of those selling to Millennials. In many cases, the vendor is offering seller financing to provide an entry point for new owners.
- The ‘Corporate Refugee’: A rapidly growing business buyer segment is the experienced professional, aged 40-55, swapping the corporate world for small business ownership.
- The Smart Move: More buyers are seeking established businesses rather than starting from scratch. This provides proven cash flow and a solid customer base in a competitive environment.
To find out more about selling your business now or in the future, contact the Coast to Coast team on 1300 793 792 to speak with one of our experienced consultants.