Is 2016 the Year You Will Sell Your Business?
This is Part 1 of 3 in this blog post series about Selling Your Business in 2016. Stay tune for part 2 and 3!
All indicators point to 2016 being a banner year for selling your business. 2014 and 2015 have seen accelerated M&A activity across the board in comparison to earlier recession years, while interest rates remain at record lows, meaning the capital buyers need is readily available.
But, as they say, all good things must come to an end. And these optimal selling conditions are no exception. The Federal Reserve is likely to start raising interest rates very soon, and we have no way to predict where they’ll be at this time next year. Also, the single largest demographic of current business owners – Baby Boomers – are coming very close to the point where funding a comfortable retirement becomes the top priority, so we can expect them to saturate the market with business sales in the near future.
If you’re seriously considering selling your business, 2016 may be the very best time to do so. But what do you need to know to do it right?
Preparation is key
Selling your business can’t be a knee-jerk decision or you’re going to get cheated. It needs to be strategically planned and carefully carried out by professionals who know what they’re doing if you hope to get the maximum value for all the hard work you’ve put in over the years.
In part two of this series, we’ll discuss six simple steps that you can take to prepare well for the sale of your business in order to ensure your company is most appealing to prospective buyers and its value is at its highest.
Obtaining an unbiased valuation
This will be covered in more detail in part two of this series, but it’s important to note up front that you’re not the best person to decide how much your business is worth. The value of your business plays a vital role in how the sale is designed and how quickly and efficiently it can proceed, so it’s an area that should not be clouded by emotion.
Instead, an experienced business broker or accountant should be retained to assist with coming up with a valid and realistic value early on in the selling process. Part three of this series will focus on what you can do to maximize the final value you receive for your business.
As highlighted above, conditions going into 2016 are ripe for selling your business, but they can’t stay that way forever, and many business owners underestimate how long it will take to complete a sale, which ends up costing them as they rush to complete a sale under less than optimal circumstances.
As our next post highlights, the average successful sales cycle for a business is 6-9 months. If you’re going to sell in 2016, don’t hesitate to start working on making it happen right now.
For more specific tips on how to effectively sell your business, read our free white paper, How to Sell a Business, A Step-by-step Guide.