Article Summary of Why Now Is The Best Time To Sell Your Business:
- 5 reasons why now is the best time to sell your business
- How the market for selling businesses is heating up
- Why you don’t want to miss the opportunity to position your business for sale (even if you’re not currently wanting to sell)
Why Now Is The Best Time To Sell Your Business
How do you know when it’s the best time to sell your business?
If you holding out for the “best time” in the market, then you’re probably making a big mistake.
As an entrepreneur focused on the buying and selling of businesses, I can say the market hasn’t looked this good in a long time. This is definitely the best time to sell your business
5 Reasons Now Is The Best Time To Sell Your Business:
- Interest rates are low
- inflation is low
- Low capital gains tax rates
- Boomers are looking to sell
- Positive market sentiment
Attempting to time the market will only get you burned. Let me show you why now is the perfect time to sell your business.
The Market is Heating Up
There are a number of macro-economic trends that have created an ideal situation for current business owners considering an exit.
The market is full of investment demand and increasing interest from business owners who want to sell. This is steadily driving up the price buyers are willing to pay.
Two important data points from BizBuySell’s 2019 Insight Report.
- Total businesses sold per quarter are trending upwards.
- Final sales price showed a dramatic spike for Q2 of 2019, a 13% increase over Q2 of 2018.
I am convinced there will soon be a tsunami of business owners downright eager to sell in the coming years. Getting ahead of this trend will ensure that your business sells in a reasonable time and at a high price.
Interest Rates Are Low
Interest rates continue to stay at record historical lows. Low-interest rates mean lower rates on borrowing, which means the buyer for your business will be more likely to secure a loan.
If history is any guide, these rates won’t stay low forever. They only have one direction to go, and that’s going to be up.
Inflation is Low
Among other indicators, low inflation at a stable rate is considered by the Fed to be an ideal situation. In this case, it’s neither too high that purchasing power is eroded or too low so that consumers stop spending.
Low inflation means consumers are buying as the dollar goes farther than it may further down the road. Both low inflation and low-interest rates go hand-in-hand. They drive buyers to purchase when each dollar goes farther and to take loans when the cost of borrowed money is less.
Low Long-Term Capital Gains Tax Rates
While not at the historical low of 15% (12.5% in 1922 notwithstanding), 20% for the maximum tax bracket is noteworthy. These rates are very favorable for business owners looking to get the most out of a sale. While the future might be more of the same, a new political attitude or administration could push these rates up to the 1990 rates of 25% or more. Don’t wait until higher rates eat into your earnings.
Boomers Are Looking To Sell
As I’ve written in my post on closing versus selling, over 60% of small businesses are held by the boomer generation, those born between 1944 and 1964. Each year more and more of these owners will look to exit and will either begin retirement or move on to the next venture. This means supply will increase as more owners list their businesses for sale. When the supply of businesses for sale exceeds demand sales prices will fall. Now is a great time to sell as prices are high.
If you are a boomer looking to sell your business, make sure you avoid the biggest mistake.
Positive Market Sentiment
Let’s face it, the economy is booming. Unemployment is at record low levels, spending is up, interest rates are relatively low, and the stock market is doing exceptionally well. Consumer sentiment has returned to pre-2008 financial crisis levels. The weather is just right for a sale, as investors have money, can borrow, are searching for returns, and most importantly, believe that tomorrow will be better than today. Now is the best time to sell.
Don’t Miss This Opportunity
Now really is the best time to sell your business. Economic conditions like we have today don’t come around often, and when they do they don’t stay indefinitely. Eventually, sellers will saturate the market, driving prices downwards, possibly leaving many businesses unable to sell. Add in a change in inflation, interest rates, or market sentiment and the market for selling could cool off.
The savvy investor knows this won’t last forever.
If you are on the fence, consider one of my top quotes from Richard Branson.
“My biggest motivation? Just to keep challenging myself. I see life almost like one long university education that I never had — every day I’m learning something new.”
With the market right for a profitable sale, you could be off to your next endeavor, be it retirement, your next big idea, or a well-deserved holiday.