Since late 2008, we frequently heard from business owners stating, “This IS when I was planning to sell, but my business is way off and I am going to have to wait.” At IBG, in most cases, we agreed with this sentiment.
Now in 2011, we’re hearing business owners saying, “My business is growing again after two long years. I don’t want to sell; my business is finally fun again.” This perspective is not surprising. What is surprising is how often business owners fail to recognize when their company is most valuable.
Declining businesses sell because they have to – Growing businesses sell because they want to.
Here are five factors that make a business more valuable:
1. The business is growing and the forecast shows annual increases.
2. The business is resilient during economic slow downs.
3. The owner is committed to completing a sale, not wasting the time of buyers.
4. The business is positioned to add new products or services to enhance growth.
5. The business model will benefit from an injection of capital provided by a buyer looking to accelerate growth and profitability.
The paradox for business owners is that selling a business when times are good and the business is growing often seems illogical. Yet for most, that is exactly the right time to sell. Remember to think like a buyer. Which company would you pay more for? A company that is expected to decline 10% for the next 3 years or a company that is projected to grow by 10% for the next 3 years?