Most business intermediaries agree that 2018 very well may be the best time in the next 10 years to sell a business. Take a look at the list of reasons below that were prepared by a colleague of mine, Alan Horwitz, Senior Business Intermediary in Sunbelt’s Las Vegas office, and see if you agree.
- Revenues and Earnings are up so selling now is selling from a position of strength. One down year can cause a three year delay in a sale as buyers like to see 3 years of growth (or at the very least 3 years of stability).
- Sale prices are up in most major industries and Capital is readily available with New Flexible 2018 SBA Rules. SBA lenders haven’t been this aggressive since 2007. For M&A deals ($5 – $50 million) capital is also readily available.
- Taxes are also going to be lower for most sellers in 2018.
- Due to the New Republican Administration and Consumer Outlook, Buyer demand is at record levels, which drives multiple offers and higher sale prices. Buyer inquiries at Sunbelt are up 75% over last year as buyer confidence has been boosted by the economy and affordable deal financing.
- It is a Seller’s market as buyers out-number sellers. This will change as baby boomers, who own 66% of small and midsize companies, finally make the decision to sell. This “Age Tsunami” is expected to invert demand, creating a surplus of businesses for sale and changing the market to a buyer’s market.
- Low Interest Rates are a great reason to sell now – the higher the interest rates the lower the multiples. The Fed increased interest rates 3 times in 2017 and additional increases are expected in 2018. So, the days of low interest rates may be coming to an end soon.
- Transactions are reaching record levels in 2017 as brokers reported the highest number of businesses changing hands since BizBuySell started tracking data in 2007. Closings are up 55 percent over 2010 to 2012. Much of this growth can be credited to Baby Boomers who are reaching retirement age and ready to pass the torch on their life’s work. In fact, in a recent survey of business brokers, 78 percent of brokers attributed at least a quarter of their last 12 months closed transactions to Baby Boomer sellers.
- Optimism of both Buyers & Lenders is as high as it has been in years making this a great time to sell.
- Other Trends include higher offers for companies with management teams in place, with reoccurring revenue, in growing industries, where there is obvious upside potential and the highest multiples go to the companies with the highest revenues and profits.
- A Recession is overdue and projected by many economists for 2018 or 2019. The next recession will create less funding, less demand, and lower selling prices. Considering that once a business owner decides to sell their business, it can take up to 6 to 12 months to find the right buyer and close on the transaction, you need to plan ahead if you want to sell under the current favorable conditions.
Alan Horwitz, Senior Business Intermediary