The Top Three Reasons to Sell Your Business Sooner Rather Than Later
| April 2022
The uncertainty during the pandemic caused volatility in the M&A market. In 2020, a survey by the International Business Brokers Association, M&A Source, and the Pepperdine Private Capital Market Project found that 81% of advisors expected business valuations to decline. However, historical data has proven that for businesses valued between $2 million and $5 million, the pandemic spurred growth into a seller’s market over the past two years.
This trend is expected to continue into 2022. Despite COVID-19 variant surges, labor shortages, and supply chain disruptions, small businesses that have weathered the storm are in high demand by buyers.
Businesses Are Selling for All-Time Record Prices
BizBuySell's 2021 Small Business Survey found that the majority of buyers (60%) require profitability and strong financials as part of their purchase ask. Have your financials taken a hit in the past two years? If so, 18% of buyers are seeking a discounted business due to poor financials, in particular, service sector and wholesale industry companies.
The Great Resignation is Also the Great Entrepreneurship Movement
Now, more than ever, people want to own a business. Before the pandemic, the average age of a business owner was 60 years old. Today, 21% of business buyers surveyed identified as being part of the Great Resignation, which is driven by mid-career professionals ages 30-45. As more and more younger people leave corporate jobs to pursue entrepreneurship, this trend is expected to continue.
Sellers Have the Upper Hand
While it may seem as though buyers should have the advantage post-pandemic, sellers continue to have the upper hand because many business owners held off on the selling process during the pandemic. Also, as industries have consolidated, bigger buyers are more interested in acquiring businesses with strong regional sales in order to expand their market.
Are You Ready to Sell Your Business in 2022?
At Raincatcher, we understand that selling your business is a financial, emotional, and strategic decision. Are you interested in learning about the intricate process that is selling your unique company in today's marketplace? Download our Sellers eBook here.
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