If youâ€™ve seen, heard, or read anything about the economy recently, chances are youâ€™ve heard the alliterative expression that strikes fear in the heart of businessesâ€¦â€śdouble dip.â€ť
Talk of a reversion to the dreaded days of 2008/2009 makes the decision of when to sell a business all the more difficult. As M&A advisors, weâ€™ve found more and more business owners seeking advice about when to sell in light of the recent economic indicators. Should they be proactive and sell now before a potential double dip sets in â€“ after which itâ€™s two or three more years until theyâ€™re out of it and can re-consider an exit that meets their needs? On the flip side though, will they be leaving money on the table if the double dip doesnâ€™t happen? Should they stick it out, hope that the â€śdouble dipâ€ť threat is overstated, see if their EBITDA continues to improve, and then sell for a potentially higher amount in another year or so?
As you consider these variables, two facts stick out: one, the planet is devoid of people who can accurately predict what the economy will do, and when; and second, business owners always have to make decisions with imperfect information. Thus, taking this into consideration, our first recommendation is that, as an initial step, owners need to write down their personal and business goals. Once written down, prioritize them and then share them with the most important stakeholder(s) (Board, key management, spouse) and consider how selling the company could impact, positively or negatively, those objectives.
Stay tuned for more discussion as the economic rollercoaster continuesâ€¦