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The Best Time to Buy a Business Is Sooner Than You Anticipate

Posted by Randy Rinon in
Many of the sales we help business owners with have to do with lifestyle rather than financial reasons. At Website Closers, we have extensive experience helping business owners to navigate the process of finding the right buyers for their company. These common lifestyle reasons have popped up more recently as the primary motivation for selling a company.

What Reasons Make Sense for Selling Your Business?

Some of the most common reasons expressed by these business owners include becoming tired of the business, the need or desire to move elsewhere, contemplating retirement or health concerns. The primary motivation behind these lifestyle considerations is a change in the life rather than for financial purposes such as needing to get out of the company quickly. The return on sale proceeds after the taxes have been taken out of the sales price might be less than what the owner was earning out of the business, indicating that the primary reasons for vacating that company have more to do with their lifestyle. In other situations, in which an owner considers selling for lifestyle reasons, the owner might not have a direct say on the timing. Surrounding the topic of retirement, however, the owner has many important decisions to make with regard to whether or not it’s the right time to sell the business. A financial planner, for example, might be brought in to determine when the owner will be eligible to collect social security and if it is anticipated that this will be a major source of income. A financial planner can help a business owner, who was thinking about retirement, see when it makes sense for them to afford to do so and can then reverse engineer to help that person decide when is the right time to list their company for sale. Here at Website Closers we focus on helping our clients obtain a meaningful sale sooner rather than later, but in some cases waiting around for the right buyer and negotiating all of the finer details of a business sale agreement can take months or even a year. In these situations, it is helpful for an owner, contemplating selling his or her business, to know what they intend to accomplish with their retirement when they leave. The sale price of a business will also make a difference in someone’s retirement ability and that sale price can vary significantly. A higher sales price because of the right timing or partnering with the right brokers to find a strategic buyer could even allow an owner to retire earlier. The fact that the sale price of a business can vary significantly is an important component that an owner cannot afford to neglect. Missing out on a high price of a company that could be popping up right now could mean that the owner of the company has to work many more years than anticipated. The primary driver of what the company will sell for has to do with the owner’s cash flow, the earnings, and the market multiple. The sales price is also affected by the current strength of the market for business sales and the industry the company is in. Scheduling a consultation with experienced and dedicated business brokers can help make this process somewhat easier to navigate.