09 Jan The Economy’s Down; M&A Activity Up?
A common comment I get from people these days is, “your business must be good right now … with the economy being so bad.” A little probing on my part usually procures the following logic: There must be some business owners that are having trouble and want or need to ‘get out’.
Well, while I understand the logic … my experience being in the business runs contrary.
What I have found is that business owners are, in most cases, logical. They want to make as much money as they can. They want to buy low and sell high, right? So would you. So when the economy is bad and everyone is pessimistic and maybe their business is struggling, they know it’s not the time to sell. It’s time to buy, if anything. But there aren’t many sellers during down cycles. The business owners will hang on and wait until times are good again. Wait until their business has at least a couple years of good performance to show. Performance they can be proud of and that would support a sale for maximum value.
Make sense? Sure, there will be some business owners that are forced to sell … but are these the desirable ones? No, they will tend to be the weakest and … maybe the ones that just need to go out of business. In tough times, the weak die.
Hey, the bottom 5% or 10% won’t have much value any way. Maybe their highest value is in liquidation.