Business is good. Why sell now?
Encouraging figures out last week show that two thirds of UK small business owners think they will grow each year over the next five years. And with so many having seen off a bitter recession, who would begrudge them the chance to make hay while the sun shines?
Things are going well, and you are enjoying the ride, so selling up may be the furthest thing from your mind. It shouldn’t be – now is exactly the right time to think about your next move. Here’s why.
When a specialist business is showing growth, it is more likely to be of interest to larger players. They don’t have to be world-beating specialisms either. Dominant local coverage, a hard-to-reach customer base, or even a unique workforce skill-set can be enough to get multiple buyers knocking on the door.
But how do you know it’s in peak condition and ripe to sell? Double digit growth? Above-average margins? Rivals sniffing around with exploratory offers? We have to look further than that.
It takes around a year to sell an SME, with sell-side advisers like BCMS looking for opportunities add value to the deal and drive momentum, and the buyers’ advisers trying to find ways to reduce their ‘final’ offer.
For example, a big new contract win halfway through negotiations can significantly add to the bottom line, and needs reflecting in the valuation. Equally, a good dealmaker has to mitigate any underperformance to prevent the buyer walking away. Deals can be complicated things, and expert advice is crucial.
Ultimately, it’s all about business confidence, which is high because the most popular route for growth right now is acquisition. BCMS negotiates with the M&A guys at the multinationals every day, and they are being pushed hard by their boards to find the next big thing at SME level.
This is happening in so many industries and across borders – acquirers and investors are actively looking for dynamic SME partners, to help accelerate their growth plans.
As one client told us, after selling up to a major US corporate:
“It’s one of those things. Probably the best time to sell a business is when you don’t need to.”