| Popular sentiment among business owners | | | | individuals are considering the purchase of a small |
| considering the sale of their businesses is that it is | | | | business as a way to earn their future living. |
| not a good time to sell. These fears stem from | | | | Strategic Buyers - Existing small and medium |
| the recessionary strains being experienced by the | | | | sized businesses are finding it difficult to grow |
| business and their potentially diminishing effects on | | | | their businesses due to a decline in consumer |
| the company's valuation. | | | | spending. Smart management teams realize that |
| Although your business may be experiencing a | | | | the fastest way to grow an existing business is |
| down year, that does not mean it is not a | | | | through acquisition. As a result, management |
| prudent time to sell. Consider the concept of | | | | teams are scouring the marketplace looking for |
| marketability. Marketability is the measure of an | | | | acquisition opportunities that will allow them to |
| asset's ability to be bought or sold. | | | | geographically expand, diversify their product and |
| The marketability of your business is dependent | | | | service lines, vertically integrate and continue to |
| upon: | | | | grow. |
| 1. the supply of comparably sized businesses | | | | Financial Buyers - While these professional buyers |
| within your industry | | | | have always had minimum size requirements for |
| 2. the location of similar businesses currently | | | | potential acquisitions, these minimums have |
| offered for sale; AND | | | | loosened as deal flow has slowed. The decrease in |
| 3. the corresponding buyer demand for these | | | | available acquisition targets has forced many |
| businesses. | | | | private equity firms to shift their focus to smaller |
| At present, there are significantly more business | | | | add-on acquisitions that compliment their core |
| buyers in the business transaction marketplace | | | | portfolios. Small businesses that would not meet |
| than there are businesses available for sale. The | | | | the minimum size requirements for private equity |
| primary reason for the lack of supply is the | | | | during its heyday are now finding themselves to |
| incorrect perception above; that it cannot be a | | | | be attractive acquisition targets. |
| good time to sell because of the condition of our | | | | As a seller considering an exit from your business, |
| economy. | | | | more needs to be considered than strictly your |
| Reasons for the high buy-side demand are as | | | | valuation when determining timing. A slight decline |
| follows: | | | | in your financial metrics over prior years may not |
| Individual Buyers - A number of workers have | | | | warrant a delay in sale. Many times an increase in |
| recently lost their jobs, are disenchanted with | | | | the marketability for your business will sufficiently |
| corporate America, and are reconsidering their | | | | offset the decline in your financial performance. |
| futures as employees. A number of these | | | | |