Corporate Finance in Atlantic Canada

Commentary on corporate finance issues for small- & mid-market private companies in Atlantic Canada

Is now the “perfect” time to sell your business? It depends …

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http://www.theglobeandmail.com/globe-investor/investment-ideas/now-may-be-the-perfect-time-to-sell-your-business/article5661285/

This article in the Globe and Mail lists a number of reasons why this may be the “perfect” time to sell your private business, such as not having to ‘fight’ through another possible recession, being wary of the tax implications of selling and beating the ‘rush’ of baby boomer sellers who will be coming to market in the coming years.

While I don’t disagree with any of these reasons, and I also agree that the timing of your decision to sell is critical, I personally believe there are so many issues to consider that now may not be the ‘perfect’ time to sell for many entrepreneurs.  For example, the personal decision of what the entrepreneur will do with his/her free time after the sale can be terribly relevant to the sell decision … may not be relevant to a buyer’s pricing or purchasing decision, but it is very important to many sellers.  Also, the consolidating nature of your industry (or not) can mean the difference between a ‘fair’ price from financial buyers and a ‘super’ price from strategic buyers, so timing the decision to sell in your industry can trump all other factors (for some businesses).

There is one reality in today’s marketplace that is an important part of the decision to sell, and that is the fact there are many more potential buyers than sellers for quality, small and mid-market businesses in the Maritimes (in some cases, three times as many buyers).  ‘Quality’ can mean different things in different situations, but the overriding criteria are typically having a profitable track record and the ability to transition the existing owner/manager to a new buyer.  Since much of the art of selling a business is matching supply with demand, this over-balance of buy-side demand must be considered in any decision to sell.

As with all complex decisions, the answer as to if this is the ‘perfect’ time to sell is mult-faceted and often begins with “it depends” …

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Written by Dan Jennings

January 31, 2013 at 9:37 am

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