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.

• Uncertainty about the asking price: small and medium size businesses do not command high price multiples. The selling price should not be the main motivation for selling a company. I frequently see frustration in seller’s faces when I tell them about what asking price they might ask for their business. Sellers say ” if I have to sell my business at this price then I would be better-off waiting another 2 years and earn this money in my business without having to sell it”. My answer is then “yes, wait 2 years and come to see me when you are ready to sell”. The business is worth more to its owner that it is to most potential buyers. Owners sell their businesses for other reasons than money. Reasons include need for change, retirement, new opportunities, sickness, moving, and many other reasons not related to money. However, for larger businesses ($1M and more in value) a deal structured as a share sale involves a tax advantage that makes the sale worthwhile financially.
• Uncertainty about Timing the sale: Most sales of small and middle market companies are driven by personal considerations that in most cases could be delayed. For example a seller contemplating retirement at the age of 60 could wait few more years before effectively retiring. This creates a huge indecision for business sellers. Timing the sale of a small or medium size business is mostly dictated by personal consideration rather economic cycles.
• Uncertainty about how to go about selling: this can be so overwhelming that the business owner keeps procrastinating for a long period before taking the necessary actions. For most sellers, this is a one lifetime event. As a result, sellers lack the  knowledge and experience to go through a smooth sale process. Some sellers discuss the issue with friends and relatives who are not qualified to advise them about it.  Other sellers would seek advice from their accountants or even entrust them with the sale of the business. Accountants however are qualified to do accounting but not to sell businesses. They are capable of analyzing the company financial statements but they are not qualified in marketing the business. Marketing a company for sale is a full time profession called business brokerage and requires a long experience and a variety of other skills including finance, sales, psychology, business strategy, marketing and others.

In my experience, business owners who know why they are selling and have a clear idea about what they will be doing after the sale and who seek help from professional brokers specialised in selling businesses are more successful in selling their companies.