“If I don’t sell now, do I really miss the window?”
At the age of 62, Karl (not his real name) tells me he is ready to sell his Nashville business. He said he regularly gets calls and emails from brokers/bankers saying, “We have a buyer for your company.” Smart enough to know that line is only a come-on to engage a conversation, Karl said he doesn’t spend time with any of those outreach efforts. However, he told me he recently had a discussion with a friend whose brother sold his company, and the friend said, “My brother says this is a great time to sell a company because deal values are going through the roof and you don’t want to miss out.” Hence, Karl’s concerns about missing the window.
Private equity is indeed flush with cash that needs to be invested, and interest rates are at all-time lows. This combination of factors makes for a great time to sell a business. Even with interest rate increases expected in 2022, availability of capital to drive deals has never been greater. But, but…that does not mean there is an open window that’s at risk of being closed. Here’s the deal, all the capital that’s out there will not be absorbed in one year, so next year there will be enough capital to go around. Moreover, while there are isolated exceptions, by and large, deal values are not rising to the point they’re bound to bounce back. Simply said, today’s hot deal environment is not likely to cool any time in the next few years.
Look, to be honest, I hear a lot of comments like I heard from Karl. Not surprisingly, much of this fear is driven by “advice” from those who have an incentive to get a business into the marketplace. They are telling business owners, the window is closing, deal values are crazy, you gotta get in now, etc. They’re playing on the fear of missing out, a/k/a FOMO.
Now is a great time to sell your business, but you’ll never hear me try to incentivize you based on fear. If you want to wait, that’s ok. Fear should only be a motivator when you are being chased by a carnivorous animal.
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The principles above are true, but the names and fact patterns are changed to preserve the parties’ identities.
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