Grim Glut is forcing prices firmly down-Business Owner
According to the business owner column in yesterday’s Telegraph, prices of businesses for sale are dropping based on a number of scenarios: “Baby boomers hard hit by the downturn”, “Average business values were being dragged down by the significant number of small businesses on the market at low prices”, “putting back their retirement because their superannuation funds had taken a hit” and ” the value of their businesses has dropped substantially.”
This all highlights a lack of long term / strategic business exit and succession planning.
We have been working closely with Bruce Guthrie of Systemflow ( who was kind enough to forward yesterdays article to me ) to avoid this scenario by implementing a strategic plan within the business to maximise value and ensure the business is not focused solely on the owner ( that’s called a JOB ) . Businesses with a strategic plan can work over a number of years towards the exit strategy they have chosen to ensure maximum results – both for the exiting owner and for the incoming shareholders ( family, employees, trade buyer etc ) and the plan should provide for a viable business model that ensure the ongoing success of the business into the future.
The article concludes with advice that owners should ” review their succession issues carefully and plan ahead if they are to optimise their realisation price, given the likely increase in supply of established businesses coming to the market in the next few years “. This advice is a good start but in our view, business owners must have a strategic exit plan and succession ( passing onto family ) is just one option. Other exit options are far more suitable in the current climate if your goal is to extract maximum whilst leaving a viable and well managed business.
Grim Glut is forcing prices firmly down-Business Owner was last modified: J