The Market Doesn't Care That You Are Ready To Retire

I am ready to retire, is a classic seller statement. The reality is the market doesn't care whether the business owner has declared that they are ready to sell. With typical business loans being 7 to 10 years in length, a 1% increase in loan interest may drop the asset price 10% on a business value. Increased costs of financing, will certainly drive down asset price values and dampen seller expectations. Factor in we just had a 1 to 1.5% increase in loan interest rates and are on pace to see another 1 to 1.5% increase in the upcoming 12-15 months. Add to this, a short supply of under the age of 50 buyers and you have an interesting storm a brewing. Financing plays a large part in the price a buyer will be willing to pay. Once the extra debt service is factored into the deal structure, the price drops and the seller claims to be blindsided by the market. Businesses positioned and sold properly will take 12-15 months on average. Start to assess the math and finance involved for the incoming buyer. Sellers could lose another 15 to 20% of value over the next 18 months.

Retirees or companies looking to get acquired should brace themselves for lowering their expectations on price if they plan on waiting to 2019 to sell. Lack of novice buyers and higher financing costs will dictate the upcoming market conditions. Over supply and high prices are currently the norm in today's sell side deal offerings. Savvy buyers, who are well funded know the upcoming conditions and will ride out a nervous seller. Sellers who are prepared, and have a pre-qualified package will win in the exit marketplace.

Below is an upcoming event help prepare for a sale or achieving, 10 to 20% growth goals for your business value. May 23rd - The Desmond Hotel - Malvern

https://www.eventbrite.com/e/grow-your-business-value-10-to-20-prior-to-selling-tickets-45204547017