“Could you get the highest price for a company when times are good? Absolutely,” Mr. Vargo says. “But you’ve got to make sure you are preparing your business for sale.
“You’ve got to make sure it’s not just one person doing everything. Make sure the business can run with a new owner. A potential buyer wants to see all these systems are in place. That makes it more enticing to potential buyers of a business.”
But economies and markets run in cycles, Mr. Rock says.
He says between the year 2000 and now there have been two downturns in the economy. It is not unlikely that over the next two to six years there could be another economic downturn. Business owners who wait for the next downturn could find it more difficult to sell at the price they could get now.
“We don’t know when that downturn will occur,” says Mr. Rock, who has been advising business clients for four decades.
Business owners who plan to pass a company to their children also have to consider timing and finances. Mr. Rock says he worked with a father who left his business to two sons who were not great businessmen. Within five years of the father’s death, the businesses was bankrupt, whereas it could have sold it for several million dollars just five years before.
“Now the kids have nothing,” Mr. Rock says. “If they had sold the business, they could have been teachers, which is what they ended up being anyway. They could have had supplemental income from the proceeds of the sale of the business. They could have gotten that for the rest of their lives, plus enjoyed their jobs being successful teachers.”
©2014 Pittsburgh Post-Gazette
Distributed by MCT Information Services
