Is your business built to sell
Is your business built to sell? A survey during September and October 2012 by John Warrillow and his company called “The Sellability Score” gave some interesting results; especially for those that own a business and may be thinking it’s time to sell.
The survey results only come from individuals who own a majority of their company and have an annual turnover of less than $20,000,000. The total respondents were 1,245 with the objective of the survey to understand the attitudes and behaviors of business owners towards exiting their company.
Other highlights from the survey include:
- Almost half of the business owners were over 500 years in age with another 29.9% between 40 and 49 years old.
- There were a cross section of industries including manufacturing, finance, professional services, retail, construction and healthcare.
- The survey includes data from around the world but most respondents were from the US, Canada, Australia, and the UK.
- 54.5% of the respondents owned their business for 8 years or more.
- 76% of respondents expect to exit their business in the next 10 years.
- 88% of respondents do not have an exit plan.
- 61% expect to sell their business to a third party, that is, not pass it on to a family member or current employee.
- Only 10% are considering passing it on to one of their children.
- 65.6% expect it to be easy or somewhat difficult to sell their business.
- 70% expect to stay on for less than 12 months after the sale closes.
- 63.7% will use the help of an accountant to sell the business while 52.2% will use the help of an attorney.
- Only 6.2% expect to sell the business themselves or 93.8% expect to use an Exit Planner, Business broker or third party professional to assist them.
- Exactly 33% expect the sale of their business to fund their retirement.
- 17.1% expect to earn a return of 4% or less on their money when they retire.
- 68.4 expect to earn a return of 5 to 10% on their money when they retire.
- 14.5% expect to earn a return of 10% or more on their money when they retire.
- 31.7% have delayed selling their business due to the poor performance of the economy.
- 40.4% of business owners would accept an offer of less than $1,000,000 for their business.
- Only 14% expect their purchase price to be 2 times or less than their pre-tax profit.
- 20.9% expect their purchase price to be 3 times their pre-tax profit.
- 40.6% expect their purchase price to be 4 or 5 times their pre-tax profit.
- 24.5% expect their purchase price to be 6 or more times their pre-tax profit.
For more information about the sellability score for your business visit The Sellability Score
If you are thinking it’s time to sell your business then now is the time to start making a plan. There are a number of moving parts and the best way to get the best price and sell your business in the shortest time possible is to do the hard work by preparing your business for sale. You are welcome to call and set up a time for me to meet with you and understand your unique situation. More information is available on my website at Successfully sell your business.