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Compelling Reasons To Sell
Your Business In 2012




The recession feels as though it has stretched on forever, doesn’t it? No one feels that pain more than a small business owner who is struggling to make ends meet in a sluggish economy. According to a NY Times article by Barbara Taylor, 2012 may be the best year to make a deal and sell your business for several compelling reasons. 

 

The Bush Tax Cuts Are Set To Expire… Again.

This year, Obama made a compromise that allowed the Bush-era tax cuts to remain in play – for now. In February, the President called for capital gains to be taxed like ordinary income to raise $206 billion over 10 years. All the calls for tax reform to “ask more from the one-percenters” will likely affect businesses too, so this may be one of the last years to take advantage of sweet baby tax deals.

 

Sometimes Improved Business Climate Is The Best Time To Unload.

Compared to previous years, many small business owners in construction, leisure and entertainment say sales are finally starting to turn around to pre-recession levels. This can be a great time to prepare your business for buyer scrutiny. That being said, keep in mind that times have changed and businesses are not selling for what they used to. According to BizBuySell and BizQuest general manager Mike Handelsman, “Buyers will often have no problem paying for a strong business, but they will still scoff at overvalued listings.”

 

Many Qualified Buyers Are Waiting In The Wings.

Investors who have weathered the recession fairly well are sitting on record amounts of capital, looking for strategic investments. Private equity firms with strong management and good ties to capital are still looking for sound businesses to add to their portfolios. While Main Street may have trouble with the banks, corporate buyers with longstanding track records of acquisitions tend not to have the same problems.

 

Baby Boomers Are Aging.

About 10,000 baby boomers are expected to turn 65 each day. More and more business owners will be looking for strategic exits from their enterprises. This glut of businesses on the market will likely outweigh the demand, causing the value of your business to plummet as well. Even if you decide not to sell today, it’s a smart idea to have an exit strategy in mind for the day when you will eventually want to retire.

 

You’re Tired.

Have you been battering down the hatches and operating in survival mode for the last four years? Maybe it’s time for a change. This level of stress surely can’t be good for your health or your interpersonal relationships. If you can walk away now with a little bit of cash in your pocket, you may find that you have a little more pep in your step. 

 

The Bottom Line

This year may be good to sell for many businesses, but you want to avoid the temptation to “time the market,” Gary Brooks, president of Exit Plan Pros, tells The New York Times. He goes on to say that he had a client in 1999 turn down a sale offer for $11 million because he presumed he’d get more selling in a few years. In 2007, someone was willing to pay $6.5 million – but currently, the business is only worth $2 - $3 million. Keep in mind that it will take about a year to complete a business sale, so if the time feels right, then go with it and have no regrets.   

 

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Resources:
New York Times: Are You Thinking of Selling Your Business In 2012?

New York Times: Bush-Era Tax Cuts

 


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