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I want to sell my business now… How do I know if the time is right?

We have received calls from numerous business owners that were planning to go to Market within the next six months, asking what they should do now. They want to know: Is now the time to go to Market? What type of Buyers are we seeing? What should business owners do if they are nearing the right time for a transition and they don’t want to wait?

It may be the right time to start the process of selling your business, or it may not be – it all depends on the business itself, the industry, and a variety of other factors. Daily, we are speaking to Buyers looking for a good fit. Many are Private Equity firms – either directly or through their portfolio companies. We are also seeing Strategic Buyers looking for a “deal,” Private “cash” Buyers who are afraid they missed an opportunity to own their own business, and Family Business Offices looking for that fit that they can hold long-term.

If you have a unique business that has been insulated from the downturn, you will look like a “diamond in the rough” to a variety of Buyers. If you can demonstrate that this downturn is a blip in the economy and that you will be back to normal revenues and profits in fairly short order, you will get Buyers’ attention. If you need to sell now, there are always Buyers looking for a “deal.”

Our advice – if your business continues to do well and the future looks good, now is the time to shine. There is not as much competition from other Sellers, so Buyers have more time to focus on good businesses and plans for growing them.  

Now that you have taken care of some of the business basics, what should you do now if you are in a position to transition soon?

1) Clean up the books and records, know what third-party consents you will need, and look into other “Deal Killers” such as forgotten agreements or verbal commitments to employees, landlords, key customers, vendors, the terms of loans or leases, etc.

2) Be able to articulate how your business has dealt with the COVID-19 pandemic and the company’s plan to be successful into the future. 

3) Talk to your Financial Advisor and discuss a realistic model showing how much cash you will need to have the lifestyle you want. This exercise may help you decide “how much is enough” and ultimately help you decide if now is the right time.

4) Consider how, when, and what you want to say to those who will be affected by the impending business transition. This includes family, friends, associates, employees, etc.

5) Talk to Business Brokers, get an estimate of value for your business, and be realistic – don’t hear what you want to hear – ask yourself, “What would I pay for this company if I was buying it today?”

6) Spend time with your Investment Banker/Broker to ensure they understand your goals for a transaction. Use their experience to help you “spruce up” the company to appeal to the largest group of Buyers. Ensure they communicate with your inner circle of professionals: Attorneys, CPA’s, Shareholders/Stakeholders, and other Advisors who have a vested interest in the best outcome for you and your business. This upfront investment of time will pay dividends throughout the process.  

Contact Performance Business Brokers for your buying or selling needs
info@performancebb.ca