1. The price is right. Business buyers are looking for profitable businesses that are priced reasonably. A highly priced business will take a lot more time to sell and will sell generally for a lower price (not higher) than if it was priced right from the first time.
2. The general state of the economy: in prosperous times, buyers’ sentiment is positive and risk taking appetite is big. Businesses generally sell is much shorter times. An average time of 6 months is generally sufficient.
3. The seller’s emotional readiness: Sellers’ Remorse is one of the biggest deal killers in Canada. An unready seller that puts his/her business for sale in the market has a very hard time making a decision about an offer. They generally end-up frustrating the buyer, loosing the offer and even losing credibility in the marketplace. The seller would need the help of a very experienced business broker to get serious buyers back on the negotiating table and close a new deal in a reasonable time. This might take years.
4. Luck: sometimes the first potential buyer ends up being the right one. The business can sell in only a few weeks. The seller needs however to be alert and recognize that a reasonable offer from a first buyer could be a great opportunity that should not be missed. A large number of sellers interpret a quick offer from a first buyer as an indication that the business is low priced. This cannot be further from the truth, especially if the business has been professionally priced.
5. The business is “sexy”: some industries are simply more attractive to buyers.  This does not mean that they represent better opportunities. It simply means that they are trendy. For example, Import and distribution businesses are in big demand at this time and generally sell for higher multiples and in shorter time periods.
6. The seller is very honest with the broker and/or buyers about the good the bad and the ugly of his/her business. Brokers collect information from sellers and present them to potential buyers. When information is unclear or misleading, brokers loose faith in the seller and the business. Brokers will then take more time to understand the intricacies of the business and find the right buyer for it. On the other side, buyers ask many questions about the business. Most buyers will back off if information is conflicting.
7. Betting on the wrong buyer. Some sellers are so desperate to sell their businesses that they accept offers from non qualified buyers knowing in advance that these buyers will fail if they buy the business. This is a big mistake as these buyers at one time or another will discover that the business is not for them. All the time spent with these buyers is scarified, The business has been out of the market during that time. Worse, new buyers start wondering if there is anything wrong with the business. Why didn’t that buyer buy it?

These are some of the reasons that will influence the time it will take to sell a business. In the current state of the economy, it generally takes the average business seller between 6 months and 2 years to find the right buyer. Good Luck!

• Because of the larger amounts of money involved in the purchase of a middle market business, the number of potential buyers is generally much smaller. Middle market transactions generally require various types of financing and are as a result very dependent on lenders. The credit crunch that characterizes the current economic climate has dramatically reduced the sources of financing for middle market transactions and therefore reduced the number of transactions.
• Private equity groups investing in middle market businesses have now a serious advantage over individual purchasers because they have large amounts of equity to invest and generally do not need financing.
• Middle Market companies have a larger number of employees than smaller businesses and are consequently less dependent on their owners. This reduces the transition risks for potential buyers and as a result increases the business valuation. Middle market companies sell generally for larger multiples than smaller businesses.
• Middle market business buyers are very analytical and require detailed and accurate financial information before making a decision to purchase.
• Middle market transactions are also more complicated and require help from professionals such as business brokers, accountants, experienced business lawyers, tax experts etc.

Middle market business owners looking for an exit strategy should definitively seek professional help to assist them in their transactions. Potential buyers have to be screened for financial capacity, business experience and management capabilities. Sellers should hire professional appraisers to value their businesses before putting  them in the market. Sellers have to prepare their businesses for sale by improving their accounting practices and restructuring their businesses to make their businesses less dependent on them and more transferable to potential buyers.

1. Interest rates are currently historically low. Business valuations are very sensitive to interest rates just like any other capital assets. Lower interest rates increase affordability and increase demand for businesses. Supply of businesses for sale on the other side decreases because some business buyers will be attracted to the higher return debt markets. There is a consensus that interest rates might increase in the near future, which makes today a real opportunity for business sellers.

2. A large number of unemployed skilled workers are looking for job replacement opportunities. The number of corporate layoffs has risen dramatically in the US and Canada in the previous few months. Laid-off employees have hard time finding decent jobs in today’s economy. A large number of these unemployed capable workers are now looking for businesses to buy.

3. Baby Boomers are getting closer to the retirement age. Baby Boomers who own businesses are starting to retire in large numbers. The number of businesses that will be sold for retirement reasons will rise dramatically in the next 10 years. This will increase the supply of businesses for sale and might depress the market in the near future. Selling in today’s market will enable sellers to avoid a probable depressed future market .

4. In the province of Ontario, Canada the Capital Gain Tax Exemption has been raised to $750,000.00 per shareholder for the sale of company shares. This is a huge tax incentive for today’s business sellers . This might not last for long as governments in North America might increase the historically low capital gain tax rates to balance their huge deficits created during this financial crisis.

5. The economy is expected to recover from recession. Most experts agree that the economy is on its way to recovery. This has recently fueled the business for sale market as potential buyers are feeling more optimistic about future economic prospects. Some business sellers are waiting for a full economic recovery to get the best possible price for their businesses but this is a rarely good strategy for two simple reasons. First, other not so favorable factors will kick-in in the future and second the recovery might take much longer than expected.

6. Supply of viable businesses available for sale is now very low. A large number of business sellers were scared of the negative impact of recession on their business sale prices. As a result, many potential sellers are now on the sides waiting for the economy to recover before putting up their businesses for sale. This is defectively an opportunity for new sellers to jump in.

While there is no exact science that can predict future market behavior, business owners in the US and Canada looking to sell their businesses should consider the above factors before delaying the sale of their companies even further and miss today’s market opportunity.