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In our last Newsletter we mentioned that Staffing firms have started to plan and budget for 2012. We found at that time that many had fuzzy plans due to the many conflicting views on the economy in the short term. Most were not planning for a double dip recession however, that sentiment seems to have changed somewhat in a few short weeks.
While many firms believe that economic growth is decelerating and are therefore planning for slower growth, Staffing Industry Analysts (SIA) reported last week that the Economic Cycle Research Institute (ECRI) a group SIA and others hold in high regard reported that we are in the early stages of another recession. What is so significant about ECRI's prediction is that they have never had a miscall or false alarm on a recession call and they have predicted every recession since they started calling recessions. They believe the recession will be mild.
Our advice repeated from our last Newsletter is to approach 2012 with great caution and let the business push you and your staff, be careful about adding overhead and perhaps slow down any bold growth plans you have, go slower and perhaps more conservatively than your instincts may indicate.
Another view is expressed in this recent article in Inc. magazine.
7 Reasons to Sell Now
By John Warrillow
If you feel like a gambler at a blackjack table with everything riding on the outcome of one hand, it may be the right time to take a few chips off the table.
It seems to me that we're at a fork in the road: there are some positive signs that the economy is entering the earliest stages of a long term expansion, but at the same time, if I dare read the headlines, it seems we're destined to repeat 2008.
It's precisely because we're at this inflection point that I see a lot of business owners thumbing the eject button. If you've been thinking of selling your business, here are seven reasons to get out now:
1. You've lost the stomach for it
A lot of business owners took The Great Recession in the teeth. If you've got your business stabilized and the prospect of fighting through another recession leaves you panic-stricken, it's time to get out.
2. The worst is behind you
Let's say you were mentally getting ready to sell back in 2007. Then 2008 hit, and 2009 was your worst financial year in recent memory. You cut everything you could in 2010 and now, as 2011 nears an end, you're starting to see some profit and revenue growth. With your numbers going in the right direction, now might be just the right time to get out.
3. The tax man is coming
Governments around the world are looking for money to fund the cost of an aging population. In the U.S., the capital gains tax rate is set to go up after 2012.
4. Nobody is lucky forever
If you're lucky enough to be in a business that actually benefits from a bad economy, congratulations. You've probably just had the three best years of your business life. But no cycle lasts forever and right now may be a great time to take some chips off the table.
5. The coming glut
As a business owner, demographics are not on your side. As the baby boomers start to retire, we're going to have a glut of small businesses come on the market. That's great if you're buying, but if you're a seller, you may want to get out ahead of the flood.
6. The closing window
It's been tough for private equity companies to raise money since 2008; so many firms had their last successful round of fund raising in 2007. Many of these funds have a five-year window in which to invest; otherwise they are required to give the money back to the people who gave it to them. Some boutique private equity firms will make investments in companies that have at least one million dollars in pre-tax profits (larger private equity firms will not go below $3 million in EBITDA); so if you're in the seven-figure club, you could get a bidding war going for your business among private equity buyers keen to invest their money before they have to give it back.
7. A good time to be liquid
The stock market has been swinging wildly lately which is why it would be nice to get liquid. With cash in the bank, you will be able to take advantage of a fire sale on the stocks of good quality companies should the market sink.
John Warrillow is the author of Built to Sell: Creating a Business That Can Thrive Without You. Download a free chapter at www.BuiltToSell.com.
Several firms we have spoken to recently are looking for exit strategies in 2012 as they are tired of this prolonged period of economic uncertainty.
Many want to see what their business is worth. We can help with a rough but accurate valuation of your business at no cost if you ask our advice about selling.
If you are interested contact us and we will send you the information we need to give you an idea of your value
Whether your staffing company is interested in buying or selling you need to consider both the positives and negatives of the transaction. We hope this information is helpful to you in that decision. Please contact us with complete confidentiality so we can help you with your plans.
November 2-4, 2011
We will be exhibiting at the
TechServe Alliance Conference
Wild Horse Pass Resort, Phoenix, AZ
Come see us in Booth 119
Contact Sam, Bob or Mike, who have successfully completed over 130 staffing industry transactions, if you'd like to discuss M & A matters related to your staffing firm on a confidential basis.
http://www.racohenconsulting.com/contact.html | 
