Selling a business in the slowdown

Avondale completed three deals in the last week....How? Of course our experience and approach is essential but also people are still buying in a recession... Why?

Many of the companies we handle are niche and this means their margins are protected despite the economy, and they still achieve healthy valuations.
Many companies see acquisition as a route to growth and economies of scale.
The banks are under Government command to lend and private equity is looking at smaller value cap deals to offset the corporate deal slow down.
Tax for many sellers on the gain they make can be as little as 10%.
Low interests rates make debt affordable and encourage cash from deposit into ventures with high yields.
Corporate clients are spreading the risk of acquisition by acquiring a series of smaller companies

How to maximize your buying and selling position in a recession

Some believe that selling a business in the current climate is difficult but good deals are very much being completed. This is because many entrepreneurs see opportunity, rather than adversity, in change and many investors believe that the returns that can be generated in the small to mid market compare very favourably with other investments. The danger for sellers is market uncertainty. The key to maintaining value is to ensure that as many variables and risks for buyers have been removed. Buyers will understandably be more cautious. Remove this caution and you can still maximise your exit. Here are 8 key ways to maximise your buying and selling position in a recession:

1. Avoid panic. It's not the British way to get over-excited, but even the coolest heads can find it hard to maintain a steady approach to the current turmoil. Whatever you decide to do, try and avoid rushing. Keeping in touch with latest developments, via Avondale, will help you judge how and when to take action.

2. Reassure buyers. Buyers are understandably jumpy, the better your systems, financials, team and forecasts; the less risky a purchase will seem and the higher the price.

3. Avoid the waiting game. Don't rely on something to happen, or being over optimistic. Selling a business is tax effective. Your profits may be lower and as may be your value, or it may be more or the same. Determine the actual and compare the value to other asset classes. Property is in many areas 30% lower for example so if you have cash from a business sale your money will work better for you than before the crash.

4. Talk to advisors. Avondale will maximise your buying and selling market place and deal value. Now more than ever is the time for immediate, good business intelligence and expertise.

5. Listen and be flexible. Good deals can only be struck by buyers and sellers that take the time to understand and respect each other. Deal structures are not generally as strong as they were so listening and flexibility is essential.

6. Avoid the Safety Game. Not everyone seeks safe harbour in a financial storm. Buying and selling now is where the biggest gains can be made. Struggling companies can represent exceptional value long term. Acquiring growing companies can offset weaknesses in your business and sellers are more realistic in a downturn about deal structures.

7. Review finances. Avondale have excellent finance contacts to fund deals or cash flow. The right lenders remain active and debt is available. We also work alongside specialist tax advisors with a number of proven schemes than can save you tax. Every penny counts in a recession.

8. Avoid doing nothing and losing out. Companies should consider transactions in their long term strategy. Now more than ever is the time to review your position and ideas. It may be that an equity investment might bring a solution to cash issues, a sale deliver a safe harbour or an acquisition strategic growth whatever the benefits discuss and review your position.