I am quick to remind small to mid-sized business owners that when they get a good offer for their business, they should take it. A business is always most valuable when it is performing well.
Yes, I know, that’s easier said than done. Most business owners work countless hours to get their business to a point where the profits are rolling in. And suddenly someone wants to come in and take it away from them. Even at a great price, that can be a hard pill to swallow.
I know. I’ve been in that situation. During my 50-year business career, I’ve started eight businesses, including my current company, Allegiance Capital Corporation. Six of those businesses were successful, and I sold them for a nice profit.
But the one that I’ll never forget was another story…and a hard but memorable lesson. It was a high-end leather furniture business. I’d actually been offered a good price for the business and turned it down.
And then it happened. It was 1980. Jimmy Carter was president and interest rates shot up to 21 percent. Now there may be some businesses that can survive or even thrive in an economic environment like that, but not a leather furniture business that featured sofas priced as high as $12,000. In fact, furniture is generally the first purchase to be deferred when interest rates get high.
I have to admit I was caught off guard. As I’ve told many others since, you simply must be aware of market conditions at all times. And when the market changes, you have to be ready to adjust. If you don’t, the consequences can be severe.
They were for me. I ended up selling my business for pennies on the dollar. And while I would never claim that I’ve mastered the skill of seeing clearly into the future, I do believe it’s possible to pick up on trends that could be good or bad for your business.
Unfortunately, I didn’t pay much attention to those trends, and it cost me a lot of money. In retrospect, I should have accepted the offer for my business. If I had been paying a little bit better attention to what was going on around me, I might have avoided what I still refer to as my “spectacular failure.”
That was 37 years ago. Almost four decades. But the lesson I learned is as valid today as it ever was. Today the trends tell a far different story. We are in the eighth year of a bull market. Many people, me included, feel that we might still have a couple of years before the next recession.
If you have been thinking of selling your business for any number of reasons, you owe it to yourself to look into your options while the mergers and acquisitions marketplace is still vibrant. You don’t need to learn things the hard way as I did back in 1980. Let my experience be a lesson for you.
This is a great time to consider your options. Businesses are selling at the highest prices we’ve seen since 2006. Perhaps you’ll decide that you’re still not ready to sell your business. But you should make that decision after you know the facts.
If you’d like to learn more about what goes in to selling a business, we have a great book that we’ll provide you for free. It’s called Street-Smart Moves for Selling Your Business by Joe Aberger. This small book addresses 29 topics that are critical to selling a business like yours. Be sure to Sign Up Now.
And, in the meantime, if you have questions, feel free to call me at 214.217.7732.
About the Author
David J. Mahmood
Founder & Chairman
Phone: (214) 217-7732