Each new year brings the opportunity to assess goals and, for some, to reprioritize dreams that have been on the backburner. For many hardworking business owners, those goals and dreams involve selling a business. There are many reasons one might sell a business, whether to retire, to invest in other entrepreneurial pursuits, or a number of other scenarios. The start of a new year offers a prime opportunity to evaluate whether it is time to make that move.
But, what about this new year? Is selling a business in 2023 a good idea?
As a matter of fact, there could be many advantages to selling a business in 2023. Here are a few reasons why (and a few words of caution to keep in mind, too):
Top 3 Benefits Of Selling A Business In 2023
1. Demand Remains High
The strength of small businesses has been put through the fire since 2020, and 2021 and 2022 saw a surge in buyer demand for companies who survived the pressure. The good news for owners who have not yet sold is that not every buyer found the deal or the business they wanted in 2022, and demand for businesses with solid financials remains high.
The continuing demand is fueled on the buyer side by a combination of folks (primarily “corporate refugees,” forced into retirement in 2020-2021) looking to buy a business for the first time, as well as private equity firms with record amounts of cash available to spend. Meanwhile, on the seller side, due to lingering pandemic-related and other global challenges, there are still fewer than normal owners prepared to put their businesses on the market. This all adds up to the supply and demand situation that resulted in higher valuations and sales prices through 2022. While 2023 is seeing SBA financing costs increase with a trend toward pre-pandemic lending rates, SBA lenders are still actively lending on business acquisitions, and businesses with solid earnings still make sense for buyers in 2023.
2. Labor Shortages
One reason you may want to sell in the new year is the current labor shortage. The labor shortage among small businesses has been widely documented, and no sector has been left untouched. According to a 2021 survey conducted by Forbes, approximately 79% of small business owners surveyed were working more hours to overcome staffing issues. The strain continued through 2022, and according to the Bureau of Labor Statistics, the year closed with near historic high levels of job openings overall. Some owners have chosen to dig in until the shortage is resolved and continue putting in that extra time on top of everything else; for others, the struggle to fill critical positions is driving the desire to sell sooner than later.
3. Operational Evolution
On top of the continued labor shortage, many small business owners are having to adapt to major operational changes, primarily the shift to a more digital environment. In many cases, what began as a survival response to the demands of the pandemic has now become permanent. Interestingly, however, one of our most common recommendations for increasing the value of a business is to increase your online presence. Overall, the past two years’ increase in digital, online, and remote solutions has helped most businesses become more staff-friendly, efficient, and profitable. Subsequently, companies who have adopted these solutions have become even more valuable and attractive to prospective buyers.
If you are considering selling a business in 2023, make the most of the opportunity, and take the necessary steps to sell your business for top dollar. The best first step is our no-cost, no-obligation valuation service to business owners who would like to understand the market value of their business. Viking Mergers & Acquisitions has assisted over 800 business owners since 1996, and we are here to help you get the best result possible. Contact us today for a confidential valuation and consultation.