Top 10 Reasons why NOW may be the best time to sell
Reason 1: Taxes on a sale are low but soon will be going much higher
To read our report on how selling sooner rather than later can help you beat impending tax increases, click here.
Reason 2: Multiples are high right now
Multiples are as high as they have been in recent years but some experts expect that they will soon begin to fall. More importantly, there is little expectation that they will increase beyond today’s range. Trying to “time” multiples is like trying to time the stock market. How many people get burned every time a bubble bursts? When prices are high, there is a tendency to wait for them to rise even more, until it’s too late. The time to sell is when you can get a good price, even if it may not be the best price you’ll ever see. We believe right now is a good time to get a good price.
Reason 3: Quality Buyers Still Have Credit Lines and Cash
In every part of the country there are large companies with good credit lines and track records of acquisitions. Despite the bad economy, deals are being done with attractive seller terms. “Cash is king” for many sellers and it’s still possible to do a cash deal. On the other hand, if you’re looking for a non-cash deal, perhaps for personal financial or tax reasons, you have many options. One thing is certain, the financial strength and integrity of the buyer is critical. If you’re being paid over many months or even years, you want to be confident that the buyer will be there for the duration. Now more than ever, finding that “best fit” buyer is of the highest importance and it’s not necessarily who you may think it is.
Reason 4: The future is unpredictable
We’ve seen too many cases of unplanned sales due to unexpected events. Serious health issues affecting the principal or a close family member are by far the most common. Can your company continue to operate without your full-time involvement? What about the loss of a key employee or several? We’ve also seen serious financial problems due to internal theft or embezzlement by a trusted employee.
Perhaps your local government will provide monitoring. Back in the “old days” of direct wire monitoring before digital communicators, many local police agencies provided monitoring in their dispatch centers. Back then the charges were minimal, but in government’s never-ending quest for revenue, many municipalities see alarm monitoring revenue as a pot of gold.
Or, maybe the Cable TV provider or your local phone company will try again to provide alarm monitoring “bundled” into their overall communications service. They tried it years ago and were unsuccessful, but the communications industry has changed dramatically in recent years and so has their business model.
The digital communicator revolutionized the alarm business for the good; will the digital & internet revolution be as beneficial? Look at the digital photography revolution and what it did to Polaroid and Kodak. Aren’t you glad you’re not selling camera film or processing?
You know what your company is worth right now but there’s no way to know what the value will be in the future. We believe now is the time to act.
Reason 5: There May Be Attractive Opportunities for the Sale Proceeds
Talk to your financial advisor. We don’t give financial advice, but right now there could be many alternatives for the proceeds from a sale that both have the potential for locking in the current value of your company, and offering you the opportunity for significant gains over the next few years.
The bottom line: This may be the last, best time to sell for many years
Don’t put it off any longer. Do your homework, evaluate your situation and, most importantly, talk to your tax, financial and legal advisors about your options. The rewards could be huge.
If you are ready to seriously look at selling, or just want to know what your company is worth, give the Graybeards a call. We’ve been helping hundreds of other dealers like you achieve their dreams for years.
5894 Partridge Lane
© 2011 Davis Mergers & Acquisitions Group Inc.