Is it time to sell?

 
 
Posted8/20/2018 1:00 AM
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Maybe.

We're not talking stocks and bonds, but if your business is ready to sell -- financials are good; the marketplace is strong; in-house leadership is solid and your business' succession plan is realistic -- data from BizBuySell.com are pretty positive.

• A BizBuySell analysis of 64 transactions closed in the second quarter turned up a median sale price of $225,000, which the organization says is 0.88 percent of the asking price.

• Median revenue was $575,000; median cash flow $111,611.

• Buyers, BizBuySell reported, paid an average of 0.47 times revenue and 2.68 times cash flow.

Although some observers caution that the BizBuySell data tend to reflect smaller businesses, the company's claim to be the Internet's largest business for sale marketplace is generally accepted. The data above are based on the Chicago-Naperville-Joliet, IL-IN-WI marketplace, which covers 14 counties in those three states.

Like the numbers and perhaps not surprisingly, BizBuySell's news release touting survey data paints an interesting picture. Selling is more complicated that simply putting a For Sale sign on the door, however.

Paul Heinze and Joe Goldberg, together, are Goldberg Heinze Business Advisors, a Barrington Hills consultancy that focuses primarily on the manufacturing sector. Buyer interest seems up, which makes their perspective interesting.

Heinze notes, for example, that "We're hearing from more private equity firms," an investor sector "that historically has not looked at manufacturing." Contacts, Heinze notes, are "from across the country."

Although the three of us have talked before about 75 being the new 65 -- that is, better health and stronger finances make business owners in all sectors more confident of staying on -- that fact has had a marketplace impact. With owners more willing to stay in place, "There are a lot of dollars chasing limited opportunities," Goldberg says.

Still, interest is strong, helped along by what Heinze calls "exploding" interest in 3D printing. "There are not enough of those companies for sale," he says.

What's perhaps equally interesting is Goldberg's opinion that Baby Boomer owners "are more willing to sell" than they have been before. For one thing, they're older: The 75-65 thing eventually catches us all. For another, Goldberg notes that many Boomers "already are second generation owners," though that's not necessarily a sell marker.

Other issues prompting at least some manufacturers to consider a sale include technological gaps that many companies face; weak margins; basic owner procrastination; uncertain health; and domestic issues that might include a divorce or lack of potential heirs interested in taking over the business.

There is a potential downside in the marketplace -- in virtually any sector. "Fear of the unknown," Goldberg says. "Dramatic interglobal activities, anything that fosters fear," Heinze says. BizBuySell points to immigration policy changes and the U.S.-China trade war as potentially upsetting issues.

Still, though they are well aware of possible negatives, Heinze and Goldberg generally agree that "by the end of the year, the year will be very good" for buyers and sellers alike.

• © 2018 Kendall Communications Inc. Follow Jim Kendall on LinkedIn and Twitter. Write him at Jim@kendallcom.com. Read Jim's Business Owners' Blog at www.kendallcom.com.

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