Broken Nest Egg

Many of our business owner clients who want to sell are doing so because they are ready to retire. They have a plan in place, the business is at least stable, and they want to start interviewing potential buyers. We have another set of potential business owner clients who continue to delay the sale of their business because they don’t feel they are getting the true value for the business, they haven’t saved enough, or they just aren’t ready.

Timing is very important in the sale of a business. Are the revenue trends upward or level, are the net margins strong, is there a stable workforce, etc? If you are at retirement age or just burned out, give strong consideration to sell when things are going well. Don’t wait for the business to turn upside down.

Here’s a current example: We have a client who has waited beyond the good years. He is now in his late eighties, owns a large manufacturing facility in rural Oklahoma, and for the last few years has seen a declining revenue trend as he has not had the same energy and focus to keep the business growing as he did a decade or two ago. His business is now worth about one-third of what it was just a few years ago. He has fought his advisors for the last couple of years with his stubborn opinion of value. Now it will be very difficult to sell at all (other than an asset auction).

There was a good article in the Wall Street Journal recently that gets into this issue a little deeper. It’s also interesting to review the comments posted about the article.
If you have a business, you need to plan ahead. Talk to one of our Kansas City Business Brokers.