Many business owners are breathing easier because their companies are growing again in billing and profits. Until recently they thought of selling and resting or retiring, of moving to a less turbulent lifestyle. Now they are being to doubt. They no longer know whether to sell or launch themselves into an investment
In the world of buying and selling companies, the best thing is to go against the grain. When you no longer feel like it, it’s usually the best time to do it.
The three reasons that indicate that we are in the best moment to begin the process of selling a company are:
Top moment of a bullish economic cycle
The most advisable thing is to sell your company at a peak moment of a bullish economic cycle. There is more abundance of money, the stock markets are at historic highs and buyers are much more optimistic. In these times of economic boom it is easier for buyers to finance themselves to acquire, either through banks or by issuing corporate data, which allows them to pay even more.
Interest rates are at historical minimums
An external element that is vital to determine the value of a company are the interest rates. If the rates are low, companies are worth more mathematically.
Interest rates have never been as low as now. Companies have never been worth so much. The rates will inevitably rise again with inflation.
Ocean of unprecedented liquidity
A radical set of policies to get out of the 2008 financial crisis has provoked an ocean of liquidity of unprecedented proportions. Money in the hands of venture capital is at record highs, central bank balance sheets are inflated and the liquidity of listed companies is causing a wave of sectoral concentration. You know your sector. If the wave has started, it will change its competitive structure and the margins will suffer more. The last ones that remain without participating in the concentration will not be able to hold on.
The sale of a company is one of the most important decisions that an entrepreneur makes in his business life. On many occasions, although he has powerful reasons to do so, he looks for excuses and arguments not to take that first step. Indecisiveness is an attitude that also has consequences.
If an entrepreneur resolves to deal with the sale or search for investors for his company, my recommendation is to not look for a buyer, but to look for the one who creates the most value for the company and its employees; according to my experience, it will most likely be a foreign group, since they will have less redundancy, it will give them more space for growth and they will appreciate the added value offered by accessing a new market.