This Is a Good Time to Sell a Business
You’ve probably read about the price of used cars going through the roof because of pent-up demand and supply problems with new cars. Pent-up demand combined with a limited supply of companies is doing the same thing for the price of good companies.
A seller’s market is defined as a market where sellers control the market because the demand for a product exceeds its supply. Such an imbalance puts the seller in an advantaged position to negotiate better deals from the multiple buyers interested in purchasing the commodity for sale.
Pent up demand and a limited supply of companies in the market has created a seller’s market for good companies.
There are three reasons why there is a seller’s market for good companies:
Pent-Up Demand – Companies and investors shut down most of their merger and acquisition activity in 2020 – but merger and acquisition activity came storming back in the second half of 2021 and has gotten even stronger in 2022. Strategic buyers and investors are sitting on a lot of cash right now – and they are anxious to put that money to work by acquiring good companies.
Few Companies for Sale – The last two years, business owners have been focused on winning the COVID battle – not on selling their businesses. As a result, there is a limited supply of companies for sale right now.
Ride the Recovery – Many companies are riding the recovery wave – and, even with the uncertainty created by the war in Ukraine, business activity in the mid-America region is projected to stay strong. Buyers and investors want to acquire companies now to ride the continuing economic recovery wave.
Moral of the Story
It might be a long time before we see another seller’s market for companies like this one.
By Bruce Skaistis