The economy is stagnant, business conditions are lousy for many owners, unemployment is high, and banks and other financial institutions are crying "wolf." So, why may it be a good time to sell your business? It probably isn't if you don't have a good reason to sell now. But, if you have been toying with the idea lately, if the drive to your business seems to be getting longer, if your spouse is pushing you to take it easy, if you've been thinking about retiring or moving closer to the grandkids, you might want to read on.
You probably have all the reasons you shouldn't sell now: business is down slightly, you still want a price based on 2007 sales and income, you've still got a dependable cash flow, and you wonder who would even consider buying a business in today's business climate. Keep reading.
First, high unemployment creates new buyers. Many of those who are now unemployed may have always wanted to be in their own business, and now is an opportune time; there aren't any other jobs available and one has to make a living. Many of the unemployed are over 45 so very few companies will hire them. Those who could get hired may just plain be tired of getting laid off, downsized, etc. The more buyers there are, the higher the price sellers will receive.
Second, there is a shortage of good businesses, so the good ones will be in demand. Even those that aren't quite as good will find willing buyers. Also, consider the capital gains issue. The capital gains tax has never been so low, and the administration may try raise it in two years.
Yes, there is a lack of outside financing, but financing the sale may be in the best interest of the seller. Statistics indicate that financing the sale increases the selling price. The interest rate that buyers are willing to pay is generally higher than one could receive from any financial institution. Keep in mind that a loan for 9 years at 8% interest actually results in an amount of interest equal to the principal. The seller would basically receive the principal twice. In addition, there may be some positive tax consequences from financing the sale.
Plus, seller financing has another big advantage: it shows the buyer that the seller has confidence in the business that it can make the payments and still provide the new owner with a living wage. This is a big confidence builder for anyone buying a business - especially for the first time.
