History in the stock market shows the biggest winners (very few) and losers are investors that attempt to time the market.  I wondered what the correlation was for small and medium sized business owners to time the sale of their most Important Asset: their business.

What I found in researching this topic is interesting if not compelling.  One SME on timing the sale of your business Rob Slee, Managing Director of Robertson & Foley, a middle market investment banking firm in Charlotte, NC, and author of “Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests” has an entire theory about the relationship between economic recovery and economic cycle for selling a private business at the highest value. 

Isn’t that what all of the Boomer business owners are going to be thinking about during the next feel good phase of the recovery?  I contend that the answer is yes.  Further, most Boomer business owners are so focused (and rightly so) on surviving in this downturn, that selling their business is close to the last thing on their mind.  My Linkedin Poll on this subject shows that response is common among business owning Boomers.

When should Boomer Business Owners start to plan their exit?  Before we open that discussion consider this: a business cycle typically lasts between eight and twelve years.  For purpose of this discussion lets say it lasts ten years.  The cycle as it stands today is in the recession stage (we have at the time of this blog been here for some 28 months).  History shows that a full third of the cycle is in recession.  The next third part of the cycle is in recovery and growth for the economy, is this not the best time to sell?  I believe the answer is a resounding YES!  The final third of the cycle is represented by slowing of economic growth and beginning of the recession again.

Now to answer the question – since most business owners are focused in working in their business on a day to day basis the time to begin working on getting the business ready to sell is now.  Yes, in the midst of the recession, especially in this first part of the cycle as we begin to see the economy warming up.  Consider that it will take most business owners several months (varies but owners should allow a minimum of six months and could take as long as eighteen months) to get the business ready for sale.  By this I mean have enough time to properly transition the business to a new owner or group.

So what about driving the best valuation for the Boomer Business Owner and what does the macro environment look like for the 78M Boomers and the 8M Boomer Business owners that plan to sell their business in the next ten years?   Starting now to drive growth of high margin new sales and new repeat clients is paramount to increasing value.

Will the Sale of Boomer Business be a crowded market in the coming three year recovery period?  The answer is Yes again.  Do you have a strategy and plan in place to position your company for sale? For more information contact Brian Graham info@suncoastadvisory.com 727-742-2546