Is Now The Time To Sell Your Business?
If you are a Nashville entrepreneur ready to sell your business, you probably have concerns. One of these likely revolves around the market and whether or not you can make a profit. No blog post can answer that question for you. However, there are a few facts that can help you come to the conclusion. Here are some things to think about that can lead you in the right direction.
The market is hot.
Middle Tennessee is growing at breakneck speed. This translates into a hot housing market and an equally fast-moving economy as it relates to buying existing companies. But just because there are people that want to buy a business in Nashville does not mean that you can sell your business quickly or for what you think it’s worth. Which brings us to…
You can set your price, but buyers dictate value.
According to many surveys, most small business owners feel that the mergers and acquisitions market will cool within the next two years. Many of these believe this cooldown will become apparent by the end of this year. There is a great fear that the slowdown will have a negative impact on business pricing. This is because a sluggish market almost always translates into lower selling prices. So what does this mean for you if you want to sell your business in Nashville? It means that buyers may not be as confident and will not be willing to spend the same on a business today as they might have just a year ago.
There are lots of businesses for sale.
Another factor that determines the value of your business is the amount of competition out there. Just as you want to sell your business, hundreds of other Nashville entrepreneurs want to do the same. Some estimates find that 8 out of 10 enterprises priced between $1 million and $2 million are now or are soon to be placed on the market. One of the main reasons people sell is because of retirement. The record amount of baby boomers reaching retirement age will accelerate the number of businesses for sale.
You cannot sell your business overnight.
Even in an area like Nashville, where growth is apparent in town and in every suburb, it takes time and preparation to get your business ready to sell. If you think it might be time, start by gathering your financial information. When an investor wants to buy a business, their first questions will have to do with cash flow. Next, get other documents together. If you have a franchise, for example, buyers need to see this agreement. You will also need to consult with your franchise home office to ensure you can transfer ownership.
There is a ton of paperwork.
When you want to sell your business in Nashville, Brentwood, Franklin, Hendersonville or the surrounding areas, you should be prepared to do paperwork and lots of it. This runs the gamut from a sales agreement to confidentiality contracts you might require your potential buyer to sign before they have access to proprietary processes or systems.
You cannot just walk away.
Once you find a buyer, you should sit down together and confirm your exit strategy. Remember, the transition period is often difficult, and your buyers will likely want to know how you plan to make your exit. This is particularly important if you have a large company and many employees or have owned the same business for many years.
Not all buyers are right for your business.
Just because somebody shows up on your doorstep with cash in hand does not mean they are ready to captain the proverbial ship. Your business broker can help you weed out unqualified buyers. This might be someone who lacks the experience or financial means to take over successfully. The experience issue should be one of your top priorities if your company is associated with your name and will continue to operate this way under new ownership. Even if you are retiring, you do not want your name associated with a failed or improperly run business.
Nothing replaces a good broker.
If all of the above has you questioning whether you want to sell your business, you should know that an experienced Nashville-based broker can help you smooth out the rough edges. Mergers and acquisitions are never easy; it is a complicated process whether your business is worth $50,000 or $500 million. A single miscalculation or misstep in the process can delay the sale or cost you valuable time and money.
Contact Beacon Exit Advisors today if you have questions or are ready to sell your Nashville business.