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.

In our previous post we explained the work involved in selling a business and if it makes sens for the seller to do it on his/her own. The time,  effort and money spent by the average seller trying to sell their business is rarely worth it. If you add to that the possible mistakes that a seller can make when trying to sell on their own and the high cost of these mistakes, the decision to hire a professional is almost obvious.

Of course, in some rare cases, sellers should definitely learn as much about business sale process and do it on their own. These circumstances include extremely unique businesses that only a small number of potential buyers could acquire and the sellers already knows about them. In such rare circumstances, sellers would be better served by themselves because they can focus on these rare potential buyers and make a deal happen.

In most other circumstances, a competent business broker will add a lot of value to the transaction, much more that the fees he/she charges.

Business Brokers will save you time so you can keep focusing on your business and keeping it in a good salable shape while the broker is marketing the business. They will protect your confidentiality and save you from the harm that a confidentiality breach can cause to your business. Business brokers also expose your business to a much wider audience so you have qualified leads to choose from. You can then sell to the buyer who represents the best fit for your business and has the higher likelihood of making it successful. Such a buyer will recognize the potential and would pay  the highest possible price. Business brokers also create competition between buyers increasing the chances of obtaining the highest possible price from the market. The linked article about business brokers summarizes business brokers’ involvement in the sale of a business and the advantages of working with a licensed broker for business sellers and buyers in Ontario, Canada.

How to choose a business broker?

The most important criteria to look for when choosing a business broker are:

• Honesty: when selling a business it is extremely difficult to fool people by over-embellishing or misrepresenting your business to them. They will discover the truth sooner or later and you will have wasted your time and money. Honest business brokers are much more successful because they earn buyers’ trust and can sell them businesses.
• Professionalism: professional brokers attract serious buyers and protect sellers’ confidentiality. You can identify the level of professionalism after a brief interview with the broker.
• Personality fit with the broker: the broker seller relationship has a large impact on a successful sale. Brokers have to believe in the business and in the integrity if their seller to be able to sell the business.  I personally cannot sell a business if I don’t trust the seller!
• Marketing capabilities: Selling a business requires a wide exposure to potential buyers. The broker needs to have a successful marketing system to generate leads.
• Knowledge and experience: business brokerage requires specific skills in finance, sales, marketing and strategy to be able to explain the intricacies of the business to buyers.
• Interpersonal skills and energy level: Brokers talk to more than 50 potential buyers before finding the right buyer for the business. Successful brokers enjoy talking to people and are enjoyable to work with. Their level of energy is so high that they can create  enthusiasm in buyers’ minds and give them confidence to make the difficult decision to buy a business.

If you are a business seller and you have found a broker that has all these qualities, then you have found the right person to sell your business and you would probably be better off working with that broker.