As we begin the fall of 2019, we’re pleased to note that the economy is still strong, the markets are steady and businesses are selling. Here are a few business-selling statistics of note from a recent survey of members of the International Business Brokers Association (IBBA), with commentary from BEACON Business Group President and IBBA member Steve Boylan.
- 67% of business owners did no advance planning before putting their businesses on the market. Nearly a quarter (23%) did less than a year of planning.
STEVE BOYLAN: It is crucial to have an exit strategy in place if you want to sell when you want and on your terms. I suggest business owners start this process at least three to five years before they want to transition.
- Surveyed advisors report a closing rate of approximately 49 to 50% –approximately twice the accepted industry standard of anywhere from 18% to 30%, depending on deal size.
STEVE BOYLAN: Working with an IBBA-certified business intermediary—a professional who invests in continuing education and industry networking—roughly doubles your chance of selling your business. At BEACON, we limit our listings to ensure we can properly engage with our clients, pre-qualify all buyers and collect all necessary financial information before completing a valuation. This has led to our closing rate of 95 percent.
- More than half the advisors surveyed had at least 10 years of M&A experience. Seasoned expertise also makes a difference as proven advisors are able to make deals happen and weather market downturns.
STEVE BOYLAN: You would not let a carpenter operate on you. The sale of your business is probably the most important decision and transaction you will make in your lifetime; why would you not turn to an expert in the field to help you through this arduous process?
- Beyond a successful closing rate, surveyed advisors are generating sale prices at or near expectations. In the third quarter of 2018, sellers received between 89% to 99% of their asking prices.
STEVE BOYLAN: A seasoned business broker understands the marketplace and will not set their clients up for failure. We have some difficult conversations sometimes, but you can depend on an honest and informed valuation of your business from an IBBA member.
- Retirement is the number one reason to sell, followed by burnout and new opportunities. But, year-over-year, time to close has increased.
STEVE BOYLAN: If you want to retire in the next few years, it’s important to start your exit strategy now. It takes an average of 6 to 12 months to close a sale, depending on the size of the deal. If you want to be in control of the process, create your exit strategy team (your attorney, CPA, wealth manager and a seasoned business broker–and get your plan in place.