I recently saw an article encouraging prospective home buyers to take advantage of the current low point in the real estate cycle and “buy low” so they can later “sell high” when the housing market has regained its momentum. I realize that businesses aren’t as easy to “flip” as houses, but there’s some truth in this advice that applies right now to prospective buyers of companies, too.
In my opinion, it’s a good time to both buy a business and sell a business; either transaction can lead to a good return down the road, as long as you have good professional advisers to help you structure the sale in a way that’s favorable. The economy is always either on its way up or on its way down – and knowing when to take action when an economic cycle is still near the bottom, yet is on the upswing, can yield good results.
If you start the process of buying a business now, you’ll find that some business owners have been just hanging on during the recession, wanting to sell but feeling they needed to wait it out until the value of their company improved. Other business owners actively looked for buyers during the downturn but found that the general belt-tightening meant that less capital was available from investors who weren’t sure how long the recession would last.
Now that there’s general agreement from economists that the worst is over, there are businesses out there whose owners are tired of waiting and ready to negotiate a deal. As long as you do due diligence to make sure that the company you consider buying is financially sound and has solid growth potential, you can find some great bargains.Consult a knowledgeable professional who knows how to spot underlying problems and structure a watertight buy-sell agreement, and jump into the fray right now. Timing is (almost) everything when it comes to taking advantage of current market conditions and making a purchase that will prove to be a smart investment a few years from now.