It’s a Seller’s Market – Continued

By Gerry Chadwick, September 2010

In our previous newsletter, I stated that it can be a Seller’s market for companies that have been doing reasonably well over the last two years. Wow, did that statement generate some comments.

I would like to further explain my reasoning for making that statement and elaborate on why I believe that now is a good time to sell for business owners who have had a solid performance the last few years; and for those who are reviewing their exit strategy to consider now the perfect time to market their business for sale.

First, there truly is a supply side issue in the market right now. Currently, there are dozens of prospective buyers who are both qualified to successfully operate a business and have the financial wherewithal to get a deal done. What is lacking are a corresponding number of positively cash-flowing businesses for them to consider. That imbalance is one reason the timing might be right for a business owner. When supply is less than demand the market is better and the opportunity for a better price and quicker sale are in the owner’s favor.

The next, is timing. If over the next year or two business owners see improvements in the economy that lead to higher revenues and profits what will happen? One answer is that those owners who have had an interest in selling, but decided to hold off until things got better, are going to put the business on the market. Now the business that has done well the last few years will have more competition in the market and may lose the supply-side edge they had.

Finally, the proof that this is a Seller’s market comes from the experience we’ve had over the last 12 months. During that time Sunbelt has successfully closed on several multi-million dollar deals – at, or very close, to the asking price. In one case we had eleven, yes, eleven, offers for the owner to select from. Additionally, we have been encouraged by the banks willingness to participate. All of these deals included bank financing through local banks, in most cases using SBA guarantees.

If you or someone you know has a business that has been performing well these last few years it makes sense to give us a call to help explore the options. There’s no cost or obligation to meet and discuss whether this is in fact A Seller’s Market.