– James Carville, Clinton Campaign Strategist
Those famous words from the Clinton campaign have never been more true as proven by the most recent election. This is not a political blog so I have no argument to make for either side of the political divide. This is not an economic blog so I am not making any long-term predictions that I can reset monthly based on the data. This is a blog about Small Business and the data is overwhelming…… Small Business transactions jumped 29% in the first quarter of 2017 according to BizBuySell.com.
The promise of reduced regulation and tax reform for business by the new administration has given a great deal of confidence to businesses large and small. The stock market is also reflective of this confidence. Why does this matter? In order to sell a business the buyer has to believe that they will be able to make a substantial return on the business they purchase. Almost all sellers have a vested interest in the legacy and longevity of their business post-sale. If the market produces and environment that gives buyers and sellers confidence then more transactions will close.
Similar to the real estate market, supply and demand have a large impact on the salability of a Small Business. As more buyers enter the market, multiples will start edging upwards. If financing is available then more deals will close. The reverse is also true. As promised, I am making no predictions about the future. Right now, conditions exists that make this a very favorable time to sell a business. Bankers and Buyers have the confidence to complete transactions, rates are low and make debt service more manageable, and business are seeing increases in revenue which make them more attractive.
If you are considering selling your business in the near future, now is a great time to have a valuation prepared to see if a sale makes sense. Remember that confidence is fueling the market. Confidence is an emotion. Your business metrics can stay static but if the confidence wanes your exit strategy will be impacted.
If you would like to find out what your business is worth, please contact us for a free valuation.