When it comes to selling your online business, timing truly is everything. Not only do you want to plan the sale of your business to coincide with a high point in its performance, but you also want to be certain that the market is conducive to a quick sale. If you have been considering selling your online business, there truly is no better time than the present. As we speed through the final quarter of 2014, conditions are uniquely ideal for making big gains through a sale. Here is a look at some of the reasons why now is a good time to sell your business.
1. The Market is on the Rebound. You may think that the stock market doesn’t have an impact on your small or medium-sized online business, but the truth is that favorable gains in the stock market do increase your chances of finding a qualified buyer with money to spend. The trend of large publicly traded companies acquiring smaller online businesses is continuing, and these types of corporations often choose to sell stock in order to finance acquisitions. When stock prices are high, companies need to sell fewer shares in order to raise the necessary capital for a purchase, making more big corporations eager and able to buy.
2. Interest Rates Remain Low…for Now! Interest rates remain at record lows, but any economic expert can tell you that they won’t stay at these rates forever. Many are surprised by how long the Fed has maintained the rates at these low levels, so there is truly a risk that they could rise at any time. Selling your business now while rates remain low gives you a better chance at getting a high price on your business, as potential buyers who will be borrowing to make the purchase will be paying less to finance. This is especially true if you have a small to medium online business that will likely be purchased by an individual buyer rather than a larger corporation.
3. Strong Performance – If your business struggled in 2008, 2009 and 2010, you’re not alone. Many brick and mortar and online businesses went through major slumps during the recession, and prospective buyers will expect to see lower sales figures during those years. But with the downturn swinging up again, most companies experienced improvements in performance in 2011, 2012 and 2013. If you’re among them, now is the perfect time to sell. Most buyers will want to see three years of financials in order to make their own performance projections, and you’ll be able to show positive results. Even if 2011 was shaky due to a slow start toward recovery in your sector, showing strength in 2012, 2013 and the first three quarters of 2014 will have prospective buyers looking at your business in a positive light. This will lead to better valuations and the potential for a higher selling price.
4. Banks Are Lending Again – Many wealthy individuals and companies saw their credit scores decline during the recession, and many people were impacted by sluggish sales in their own businesses and joblessness when companies closed their doors or used layoffs to reduce costs. The financial crisis was also tough on banks, causing them to tighten up their lending guidelines. These two factors came together as a perfect storm, making it difficult and even impossible in some cases for prospective borrowers to gain funds. Statistics show that banks are now abandoning some of the former caution and granting more loans to qualified buyers. In August 2014, lending approval rates were 15 percent higher than they were the previous year, and more than half of all small business loan requests are being approved by financial institutions of all sizes. This means that more individuals who are interested in purchasing an online business like yours will be able to get the financing that they require to go through with the sale.
5. A Larger Buyer Pool – With more people making money on the stock market and doing well with other business ventures, there are more people who are now looking to buy online and traditional businesses. An increased demand for businesses like yours can lead to an increased valuation and a more profitable return for you on the sale.
Ultimately, whether or not now is the right time to put your business on the market will depend on the specific performance of your company. If you’re considering selling, getting the opinion of an online business broker can help you determine if you should sell now or hang on a little longer. Contact us today to set up a consultation.