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The Right Time to Buy or Sell a Business

Copyright @ 2006 Peter Arkwright Buying a business especially your first one can be a daunting proposition; this article will discuss the merits of when is the right time to buy. Timing is everything when buying a business, you can either time it well and buy good business for a low price or time it wrong and pay an over inflated price for a poor business. So when is the right time to buy? Generally you should plan well in advance for the sale of any business. With so many economic upturns and downturns it is impossible to predict the future. By planning well in advance you and your workforce will be prepared for the sale of the business in the future. It would be better for any seller to sell a business when the sector you are in is thriving.

If the business sector you are in is looking good for the future this will allow you to ask an over inflated price for your businesses. However saying this more shrewd business men prefer to buy businesses in an economic decline. The reasons for this are businesses are usually purchased at bargain prices, also during economic downturns interest rates are usually low; this will allow businesses to borrow at a more favourable rate. As none of us can predict the future, planning is essential in the business world, you may be undecided about selling the business, however if it is something you would consider in the future, it is important to start the process up to 2 years before. This will allow you and your employees to be mentally prepared and also accounts made ready.

The idea for the seller is to get the best possible price for the business. Being fully prepared will make you stand out like a shining diamond. Although it is preferable for a business to be sold when your sector is thriving, it is still possible to attract a good price in an economic downturn. If your business is viewed as being profitable when the sector is performing poorly, this alone may be the factor that would allow you to get a favourable price for the business. There are times when a sale may be forced on the business. 1. A partner passes away or decides to leave the business. A large company may move into the sector and look to pick off the smaller businesses 3. Your financial position may change 4.

The business may have been set up with a view of passing it down to your children; however they may decide they do not want it. Changes in legislation may force a sale, an example of this in UK was the governments decision to clamp down on roadside advertising. My advice would be never take anything for granted, being prepared to sell the business can only be a good thing if or when the opportunity arises. About the author - Peter Arkwright recently retired from the military, he is now the Managing Director of www.bizseller4u.com A new portal that allows people to list their Business for Sale This article is free for republishing.


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