“Business owners who’ve prepared and built a business that’s designed to sell – those are the ones who will come out ahead with a sizeable payday.” – David Ryan, advisor with Upton Financial Group

Prepare and Build A Business That’s Designed to Sell

The best time to be thinking about the sale of your company is when you start it. The next best time is now. Everything you do should be focused on driving enterprise value. Thinking with the end in mind, owners manage their businesses better, and that helps prepare them to eventually sell.

From a financial perspective, the buyer will be looking for cash flow, market penetration and expansion, and return on investment (ROI) from the purchase price. Growing businesses sell faster, at higher valuations and with more predictability than shrinking or stagnating businesses. Valuations may fluctuate based on the economy, the stock market, the availability of credit, and other factors.

Retirement is the number one reason business owners sell, followed by burnout. Unfortunately, the majority of owners fail to plan for the sale of their business.

The Market Conditions For Businesses Being Sold

The Quarterly Market Pulse Survey reports on businesses being sold on Main Street (values $0 – $2MM) and the lower middle market (values $2MM – $50MM). The Second Quarter 2019 Survey reported construction/engineering, business services, and personal services led among the hot industries. Manufacturing, the previous leader, didn’t make the list because of the recent trade policy changes with Mexico, Canada, or China.

Buyer Motivations

The Survey includes information about who is buying businesses. For companies priced between $500K and $5MM, buyers tend to be serial entrepreneurs, first-time buyers, or existing companies. These buyers are motivated to gain a horizontal add-on, to buy a job, or realize better ROI than other investments. The acquired businesses are typically located within 20 miles of the seller’s location.

Buyers of companies priced less than $500,000 are typically first-time buyers, motivated to buy a job, and are located within 20 miles of the seller’s location.

For companies priced higher than $5MM, buyers are generally existing companies, who are motivated to acquire a horizontal add-on, and who are located more than 100 miles of the seller’s location.

Do one thing: get your free copy of the Second Quarter 2019 Market Pulse Survey. Determine what you can do to prepare and build a business that’s designed to sell.

Thanks for reading.

 

The quarterly Market Pulse Survey is a quarterly research report produced in partnership with International Business Brokers Association (IBBA) and M&A Source. The survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). This national survey is conducted with the intent of providing a valuable resource to business owners and their advisors.

The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and Pepperdine Graziadio Business School.

CLICK HERE To Get Your FREE Copy of The Survey