Yes, this market can be a Good Time to sell

We often hear from business owners across various industries and business of all sizes that �this is not a good time to sell given valuations are down due to the economy�. Given the news we are all reading about the economy on a daily basis, this reaction is understandable.

There is a silver lining in all the bad economic news for owners of privately held businesses that are looking to sell now or within the next year or so� and that is the US has cut 3.57m jobs since the recession began in December 2007 � 2.47m over the last five months. The U.S. shed 598,000 jobs alone in January 2009.¹

What does that mean for owners of privately held businesses that are looking to sell their businesses�simply stated, MORE BUYERS!� While it is unrealistic to think of many of these workers as potential buyers of small and mid-sized businesses, a small percentage of them in fact will be looking to purchase a business over the next 12 months. This is especially true knowing what we know now about this economic downturn� it is not going to end anytime soon. Even if a small percentage of workers, that have been effected by this downturn, turn to purchasing a business this can have a very positive effect on the market for privately held businesses.

There seems to be a growing consensus that the economy is not going to be able to absorb this many laid off workers over the next one to two years.� The benefits of business ownership, controlling one�s own economic destiny, being independent etc� is resonating with many workers victimized by the current downturn. Our own experience has backed this up�our firm has experienced a dramatic increase in buyer inquiries beginning in November of 2008 and continuing in Q1 of 2009.

The following are some of the reasons we recommend to some of our potential clients, that if they are considered selling their businesses, 2009 and 2010 might be a good time to do so:

1. Increased Number of Buyers - With an increase �supply� of buyers, many of them who are financially qualified to purchase a business, comes a higher demand for quality businesses. With more individual or financial buyers in the market, this can and often does keep the valuations, especially for well-run small and mid-size businesses at the same levels before the economy took its current downturn.� While this does not hold true for some companies that are attractive to Private Equity Buyers or Corporate Purchasers, valuations are stable and in some cases up for businesses that appeal to individual or financial buyers. This can work to some of our client�s advantage.�

2. Increased Pool of Strategic Buyers - What most business owners do not realize is that the type of transactions that are occurring in the current down cycle can change. Outright acquisitions, in terms of total numbers, are down but the merger of similar or synergetic companies can increase in a downturn like the one we are currently in. Why? This is an excellent time for owners to consider cutting costs by merging with another company that can compliment their existing company, management style and skill set. Many companies in a growing economy that would not be open to a merger, are now actively, or at least open, to the idea of a merger.� Many owners believe a merger can make their �merged� company stronger than �going it alone�, especially as this downturn bottoms out and economic growth begins again.

3. Increased Revenues through Mergers - While organic or internal growth in revenues can be achieved in the current economy, in a market as challenging as this, it is often difficult and expensive to do. Why not grow through external means which a merger will accomplish. If the merger partner is identified correctly, often cross-selling opportunities are created where each company can sell their services or products to the merger partner�s customer/client base. This can create incremental revenues that would not be possible if the partners stayed as separate companies. This parallel process of cutting duplicate or redundant cost while at the same time increasing revenue opportunities, is what mergers are all about. The current market is a great time to find willing business owners that share a common vision.

4. Economy Can Work to an Owner�s Benefit - If business owners can show stability, even with some revenue decline, by making cost adjustments in a timely manner to changing market conditions, profits can in fact stabilize or even grow during these challenging times. This is appealing to buyers, and as intermediaries, our firm can often get our clients the price they are looking for by positioning their companies as having made the adjustments to the economy, therefore demonstrating resiliency in an uncertain economic environment.

Selling one�s business in the current economic climate is not for many business owners for valid reasons. But if an owner�s situation calls for a sale or merger it can be a timely and prudent decision to move forward for reasons mentioned in this paper. Economic uncertainty can, in fact, work to your advantage if the selling process is managed correctly.

¹ Investors Business Daily, Monday February 9, 2009