Market Timing: The Big Picture

Economic cycles can affect the opportune time to buy or sell a business.  In the last three decades the US has suffered economic downturns in the last 2-3 years of the decade, with recovery stretching into the early part of the next decade.

Small businesses have weathered these downturns with varying degrees of success.  Perhaps more importantly, the downturns have affected the availability of capital and buyers’ ability to secure financing for acquisitions.

We all know that the recession of 2008 was a doozy, and that capital markets have been slow to recover.  Many businesses have recovered at a snail’s pace, and bank lending is still reticent.  That said, things are improving; capital is available at historically low interest rates, so we are seeing transactions happen.

But, if history repeats itself yet again, we might anticipate a downturn in 2018. So from that perspective, sellers might focus on the window of opportunity between 2014-2018 as an ideal time to sell.  By the same token, buyers might be eager to take the plunge sooner rather than later.  Most businesses have recovered, bank financing is available, and we are likely to be in cycle of expansion that will proceed unimpeded till 2018.

If you would like more information about buying or selling a business, please contact us at Apex Business Advisors.

Paul Temme
Senior Advisor