Owners who ponders over selling their business does not always do so out of financial desperation or trouble, often because they are looking for the next opportunity or are future planning. Current climate conditions are producing a “sellers market”, read on for the contributing factors:
- Investors are facing extremely low or negative interest rates and are struggling to find areas to invest to get any decent return on their investment.
- The stock market is still producing positive yields but is overpriced and many in the market believe we are getting closer and closer to a serious market correction making investors extremely nervous about investing in the stock market.
- Borrowing costs are extremely low so investors are happy to use debt to fund acquisitions. Buyers are numerous and well-funded!
- Businesses are finding it hard to find organic growth opportunities in the market so are looking for good businesses to acquire – the M&A market is still very strong as a result and good businesses continue to be valued at attractive multiples.
- The M&A market may soon be flooded with baby boomer sellers which will likely have a depressing effect on business valuations and selling prices.
- With so many sellers sitting on the fence, those who go to market sooner will be likely to achieve the best results.
If you have a good business and have been thinking of selling, don’t wait too long as you may miss the current business cycle.
Once a business is ready to go to market, some businesses have sold in as short as six months, but the average tends to be closer to a year, with some businesses requiring more than a year before finding the right buyer and deal.