are you ready

Despite the predictions of many experts, now may be the best time to sell your business. Yes, there’s been a recession. Yes, you’d think that there should be a flood of businesses on the market. But that doesn’t seem to be the case. And prices are not depressed. A business with positive cash flow and other desirable assets that shows well can still fetch a good price.

In 2005, a survey conducted by the Canadian Federation of Independent Business revealed that over the next 10 years, 71% of business owners expected to retire from their business. I predicted that if that was the case, there would be a tsunami of boomer business owners who were going to slow down, sell or transition their business in some way so they could retire and enjoy the fruits of their labour. I was so convinced, I even wrote a book, The Business Transition Crisis, with the subtitle, Plan Your Succession Now and Beat the Biggest Business Selloff in History.

We have less than two years for that prediction to come true, and so far it hasn’t happened.

Like me, various advisors read the tea leaves and a brand new industry emerged with visions of capturing the resultant fees associated with the selling event. Bankers, accountants, lawyers, business brokers and financial planners believed that business owners would line up at their door seeking advice and expertise that would help them sell their business for the most money possible while paying the least amount of taxes. But the lineups haven’t materialized.

I asked some business brokers what’s really happening out there. Most have said that business is fine. It’s a steady increase year over year, but it’s not the huge wave they expected. “Business for me just keeps getting better. Every year I get more referrals, and that’s the only way I get business anymore,” says Rob Mitchell of Sunbelt Business Brokers Premium in Guelph, Ont.

Related: Why Your Business Could Be Next to Worthless in the Coming Years

Steve Skrlac with Keystone Realty, a brokerage that focuses on small- to medium-sized businesses, echoes Mitchell’s remarks. “The boom isn’t happening. We are busy, but not as much as we expected.”

When I ask Skrlac why, he identifies a few trends. “Boomers are healthier than their predecessors that were reaching their sixties. They want to work longer. In fact, many are bored with their previous job or being retired and are actually becoming entrepreneurs in their fifties and sixties. They may sell one business and start or buy another.”

Mitchell gave three reasons:

  1. Many sellers are just recovering from the lengthy recession.  Their sales are not back to their peak and they are not willing to sell the business for a significant discount due to the current sales levels.
  2. Many sellers don’t know where to turn. They don’t know business brokers (or M&A professionals) exist or don’t know of a “good one.” Many need to be referred by someone before they are comfortable speaking to a broker.
  3. Many either haven’t saved enough to retire or enjoy what they are doing and are not ready to retire just yet.

What I didn’t expect to hear is that, at least right now, it’s a sellers’ market. There are more people interested in buying a business than there are businesses for sale.

Mark Groulx with AIM Group Canada says, “I have a list of 42 buyers who are interested in purchasing a business worth over $3 million. And I have connections with dozens of private equity firms from North America and a few in China who have almost unlimited millions to invest, but not the complementary list of owners looking to sell.“

“It is still a seller’s market right now,” says Mitchell. “Anyone with a good business should be able to sell it for a good price after looking at multiple offers.”

So were the prognosticators wrong? Has the tsunami dissipated? “Not likely,” say both Mitchell and Skarlac.

Read 8 Simple Ways to Increase Your Cash Flow

There’s still a build-up in the market. It’s inevitable. Boomers are going to have to pass on their businesses eventually. It’s not a matter of if, but when. The when has been pushed out further into the future, but it’s still there. Even those boomers who are in good health now will eventually need to make the transition.

What’s the takeaway?

  • 1
  • 2
Loading comments, please wait.