You could be forgiven for thinking that in the world of business brokerage, we should all hibernate for 12 months and tentatively take a peek in 12 months to see if there are any green shoots of recovery showing. Certainly from chatting to clients at the moment, (with some exceptions), the general outlook is one of softening demand and perhaps therefore not the easiest environment for those looking to sell their business to find common ground with acquirers.
However, our experience is that all is far from lost and that there are some mitigating factors at play.
Firstly, any softening of demand can demonstrably be pinned on the macro economy rather than the performance of the individual business. Bearing in mind a sale process can easily take 12 months, the landscape may look markedly different at that point and an acquisition in 2023 may afford the buyer the opportunity to take advantage of an upturn in economic confidence and activity.
Secondly a by-product of the chronic supply chain issues of the last 24 months, coupled with an injection of inflation is that in the manufacturing sector, corporates are looking to own / control more of their supply chain / cost base, which is still driving acquisitive demand in this sector.
Thirdly, when the climate is tough, and market share through organic growth is difficult, acquisition offers a short-cut to boosting group level gross profits and its contribution to overheads.
Then there are some sectors that while perhaps not as ‘hot’ as 12 months ago are definitely still warm – online retail, digital marketing / transformation / Saas business models to name some sectors.
The above is not to underplay some of the challenges ahead in 2023 but rather to argue that they don’t necessarily change the answer to the question we get asked almost more than any other – ‘Is now a good time to sell my business’. The good time to sell remains the time when you are ready to sell – which typically is less related to the sticker price for your business and more often related to having something better to do with your time or with the money tied up in your business.
It is true that the level of uncertainty around at the moment may feed into more significant levels of deferred payment or adding a performance related context to the deferred payment. It may even add to the time taken to complete a sale process, but it will rarely negate the opportunity to achieve a sale – a good business will always sell.
If you are considering the sale of your business, we are always pleased to have a chat, answer questions and give a sensible view on where a guide price might sit. Even if you determine it’s not the right time to take the plunge, you will probably gain a couple of pointers that mean you are in better shape when the time finally does come.
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