With the economic downturn there has been a significant reduction in the number of good businesses coming on the market (usually due to valuation concerns). However, a broad range of qualified buyers are ready, willing and able to buy. This demand for good businesses, along with the reduced supply and easing of credit markets means sellers can capture very attractive prices when the deal is prepared and structured properly.
Layoffs and downsizing increase the pool of potential buyers
Investment groups with "dry powder" are looking for opportunities
Owners with good businesses often postpone selling in a poor economy
Increased demand and reduced supply enhances value of good businesses
Other considerations:
Commercial Lending Environment - Access to capital for business acquisitions has been improving dramatically. This is great news for anyone interested in selling or buying a business.
Favorable Capital Gains Rates: Capital gains rates are at near historic lows of 15%, for now. This can have a dramatic effect on the after tax proceeds many business sellers will realize. It can take from several months to a year to sell the average business - sometimes longer. For those business owners thinking of selling, beginning the process now could mean greater net proceeds at closing.
What About Seller Financing? - In today's tighter lending environment, if the seller adds a very small percentage of seller financing to the deal structure there is a much greater chance of having a lender support the transaction, which of course is critical to effecting a successful transaction. In addition, buyers comfort levels increase significantly which can result in multiple offers on the business and higher selling prices.
As an example: A seller note of perhaps ten percent may be incorporated in the deal structure. After the buyer has proven itself in the business and shown that debt payments will be made, the lender will often finance the seller's note, or it may also be sold to lenders that specialize in buying seller notes.
Regardless of the capital structure or finance considerations, professionally crafted and creative deal structuring is the key.
For a confidential discussion regarding todays market and how it relates to your business sale, call or email today.
