Should I consider selling my business even during a recession?
Most would think the answer is no because either the recession is negatively impacting your company performance and/or acquirer’s aren’t looking to conduct acquisitions to reserve their cash through what could be a difficult time for them. And if they are acquiring, they are looking to do so on the cheap which of course won’t serve your best interests.
However, each company is a case study of one and your situation might allow for it to make sense to explore an exit even during a recession. If your company is a solid performing business, has unique competitive advantages, has an exciting future growth trajectory and you’re prepared to successfully withstand a third party due diligence, then businesses like this can sell at any time and even command a premium valuation. But if your business is struggling or performs inconsistently in recent years and doesn’t offer a truly unique business to an acquirer, then most likely a recession is not a time to consider exiting.
Our advice to clients is to build a business that could always attract an acquirer in the event that either you wake up one morning and decide it’s time to exit or you are approached by what you deem to be a very strong partner for your business and want to take advantage of their being in an acquiring mood. So for some businesses, they will be able to command a premium valuation from attractive acquirers even during a recession but others may not. If you’re considering trying to exit in the next 12 months, speak with an investment banker or give us a call and we can outline specific questions and steps you could take immediately to help you answer this question specific to your company.
