Why Good Businesses Sell Better in a Recession!

In a recession, more mature, financially strong, middle and upper management people lose their jobs and can’t, or don’t want to, find a new JOB!

Many of these astute people take this opportunity to search for the business of their dreams to become there own Boss to leave the rate race of making money for their unappreciative employer(s).

For the established business owners contemplating retirement, recessionary times can be the answer to their prayers to sell their business and retire comfortable by reaping the years of hard work they have expended in building their niche business profit center.

The down side to the business owner is that most are ill prepared to present their business in its best, and most profitable, light when it comes time to sell.

“Fair Market Value” of a going business is a value where a ready, willing and able buyer and a willing seller can come together and do a deal that makes sense to both parties.

Fair Market Value is always a function of whether the business to be sold can, through historical cash flow as reported by the last three years business Tax Returns, provide a fair return on the buyer’s investment of time and money while still paying necessary debt service.

Here’s the Seller’s rub, if he/she has not prepared to sell properly.

Most businesses operate their enterprises to reduce their tax liabilities to a minimum. This works quite well during the growth and maturity years, but will substantially reduce the value of the business when it becomes time to sell due to reduced reported profits.

It normally takes two to three years to prepare a business for sale so that the Tax Returns justify the true worth of the business. By simply foregoing some “benefits” of tax reduction, many business owners can increase their business worth (Fair Market Value) by 25% to 100%.

This current recession will probably last 2 to 3 years due to the damage of the credit crisis. Therefore, contemplating business sellers have a like period to get their businesses in order to sell into the best selling market we will see for years.

The best way to start, if you are a business owner looking to sell at maximum value, is to have a professional business evaluation done “right now”!

The business evaluation will give you an idea of what your current Fair Market Value is now and then be used as a tool to wring the most value from your business upon future sale, — simply by trading some small tax increases for a huge pay day at the time you sell to a great buyer.

Why leave a potential $100,000, or more, on the closing table when your business’s bonus value starts with a simple Business Evaluation.

Find a reputable Business Evaluator to get started on reaping the retirement you deserve.