For quite awhile, there was a lot of uncertainty surrounding the global economy. With the unexpected changes in the European Union and the chaos of the U.S. election, banks, markets, and investors did not have a very strong sense of the future. However, things have seemed to calm down a bit, perhaps due to an acceptance of what is to come. Now, there is actually a healthy amount of activity in many different markets, and a fairly positive outlook regarding the global economy as a whole. There are particularly strong expectations for solid mergers and acquisitions (M&A) activity, especially cross-border transactions. In light of these expectations, many companies are likely considering selling their businesses this year or perhaps should be taking it into consideration. Deciding to sell is obviously a big decision, and timing is critical to ensuring that a company gets the best deal possible. Here are several indications that this may be the right time to sell:
Even when markets are doing relatively okay, if there is fear and pessimism that things are not looking completely rosy or are perhaps on the brink of some kind of implosion, it is quite often the negativity itself that can lead things astray. Fortunately, some of the prior fearmongering about the state of economic affairs has seemed to dissipate. There is increasing optimism that the U.S. economy is on an upswing and that things are only going to continue to improve. Just as pessimism can negatively influence the markets and economy, widespread optimism can have a positive impact. In light of this bright outlook, companies that may be poised to sell should be preparing themselves for the possibility and remain open to a potential offer.
Of course, because of the growing optimism, there is a very good chance that a lot of companies will be looking to make some strategic partnerships and purchases. And, as more companies get into the game, other companies will likely follow suit. No one wants to be late to the party, so when several companies exhibit a sudden interest in making a strategic merger or acquisition, this will more than likely help further fuel the market. It is also quite likely that this interest will continue to be fostered, as there will likely be changes to currency values and taxing schemes in both the U.S. and abroad. In addition to these changes, there will no doubt be other incentives to ensure that companies can thrive and create jobs. Thus, it is important to reiterate that companies that are willing and prepared to make a sale should take the appropriate steps to be able to execute if given the opportunity.
One of the stronger, more tangible indicators that this might be a good year to sell your business is based on the IMF’s analysis and prediction that global growth will increase this year, although they described the direction of the current global economic movement as going “sideways.” This may sound like an odd way to assess the situation, but going sideways is certainly better than going backwards into a recession. And, the reality is that the current projections do in fact demonstrate anticipated growth, which clearly bodes well for businesses everywhere. Of course, there are legitimate concerns over trade policies and regulations, so companies that absolutely need to sell in the near future must pay close attention to how this could impact such a transaction.
Ultimately, timing is an important facet of selling a business, but having a business that is actually strong and successful is more important. For companies with a solid standing and healthy earnings, there may be no reason to wait.