Navigating the High-Interest Rates to Get the Value You Deserve for Your Business in the Greater Salt Lake City Area

Building up your business for years with painstaking effort only to receive astoundingly low offers from buyers can be devastating. While high-interest rates can be a hindrance to those looking to sell their business in the greater Salt Lake area and the state of Utah, learning the effects of these rates, along with how to navigate them, can ensure you get the value you deserve. At Sunbelt Network Utah, we are seeing strong valuations at 2017 levels because of our ability to sell the value of a Utah business, one of the best places to do business in the country. You should deserve more.

The Downsides of High-Interest Rates for Sellers

Most business owners underestimate the impact of high-interest rates. However, it is highly probable that these drawbacks will become apparent if you intend to sell your company in 2024. Here are a few downsides to consider and discuss with a trusted advisor:

• Elevated borrowing costs deter potential buyers, diminishing their inclination to make purchases.
• A diminished pool of buyers is a direct consequence of the prevailing high-interest rates, leading to an uptick in acquisitions by private equity firms.
• Your business’s valuation and cash flow can face significant repercussions when high-interest loans remain outstanding, exerting a strain on financial stability
• Buyers may leverage the presence of high-interest rates as a strategic bargaining tool to secure lower prices during negotiations.
• Negotiations can become notably more intense and competitive in light of the challenging interest rate environment.

How to Overcome High-Interest Rates When Selling

Considering the above downsides to the current state of interest rates, learning how to effectively navigate this to get the best value for your business is important. To that point, here are a few key tips to keep in mind:

1. Consider the opportunity cost: Waiting for interest rates to fall may not always be advisable as other unforeseeable costs or opportunities may occur.
2. Understand the market value of your business: Having a professional conduct a business valuation can ensure you head into negotiations with the resolve to stand behind your asking price with confidence.
3. Sell at the right time: The process of selling your business can take 6-12 months in most cases, meaning interest rates may fluctuate over the course of the sales process. By working with a Sunbelt Network Utah professional, you can identify the right time to go to market to reap the best results.
4. Consider financing a portion of the purchase price. Recent Q4, 2024 M&A transactions Sunbelt Network has led, sold businesses at higher prices with a minimum of 30% cash down from the buyer. In another scenario, we had a seller offer to carry 10% of the purchase price, the buyer put down 30%, and the SBA was happy to fund the remainder. This structure lowers the amount financed at a higher interest rate by the SBA, increases the “comfort” in the transaction by the lender, and provides more cash to the seller.
5. Sell being in the state of Utah. We have seen good companies continued to grow top-line revenues and profits during 2023 in Utah, a difficult economic climate just about everywhere else. Businesses looking to expand here from other states, Private Equity want more business owner in Utah, and private individuals with money to invest want to spend more time here or move to Utah.

Seek Assistance Selling Your Business During Times of High-Interest

Understanding the nuances of the Salt Lake City and the State of Utah market can be challenging between determining fair market value, finding the right buyer, and navigating interest rates. Fortunately, Sunbelt Business Brokers of Utah is here to help accelerate the process of selling your business and connecting you with interested buyers. With years of experience and a deep understanding of the competitive Salt Lake City and Utah market, there is no better team to help you close a deal. Reach out to schedule a valuation or consultation today!