Three Considerations for Selling a Business This Year

By Andy Kocemba

I’m often asked how busy my company gets as the year end approaches. My simple answer is that there are many factors involved in the successful sale of a business, and while the time of year can have an influence, it’s only occasionally a strong one. If you are considering selling your business by the coming year end, here are a few questions to ask yourself to determine if time is a critical factor for you.

1. Are there upcoming tax / governmental changes that will positively or adversely affect the sale of a business?  As I write this in 2019 looking ahead to 2020, the simple answer is no, there are no upcoming changes to the tax code or elections that will strongly change the way a business sale plays out.  In some years this can be an issue however, so it’s a good thing to keep on your radar.  And as always, we recommend you have a very open and in-depth planning discussion with your accountant to see how your personal situation will play out once you sell your business.
2. What are the economic trends? We are entering a period of slowing growth for the overall economy. This doesn’t mean recession, just that things won’t be as robust as in past years. If you are looking to sell, now is a good time as your business is likely near peak value, financing is available for buyers, and periods of economic uncertainty often bring more motivated buyers to the forefront. The bottom line is that if you have a thriving and profitable business, you will always have a buyer. 
3. Why are you motivated to sell so soon? Ask yourself what you most want to achieve in a sale. The most common answers we hear are the highest price possible, a buyer who will take care of your employees, a quick sale, and a maintained legacy.  The important thing to remember is that while these matter to you, they are not the primary concerns for a buyer. These items are merely bargaining chips in making a deal come together, and gaining one often means sacrificing another.  If a high price is a priority, you might need to put the year end timeline on the back burner. If time is of the essence, be prepared to sacrifice on price and terms to get a buyer to move quickly. 

You might have been hoping for a more direct answer, perhaps a red light or green light, but other factors in selling a business are more important than what month it is. If you have a healthy and strong business, and know it is the right time for you and your family to move on, then the sale will work out well any time.

Takeaways:

1. Time of year is rarely a factor in a successful sale.
2. There is no pressing need to sell a business before 2020, but if its a personal goal, there's plenty of time.
3. Ask yourself what you most want to achieve in a sale and recognize that achieving one goal may mean sacrificing another.