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 2022 a good idea?
As a matter of fact, there could be many advantages to selling a business in 2022. Here are a few reasons why (along with a few words of caution to keep in mind, too):
Top 3 Benefits of Selling a Business in 2022
1. Demand Remains High
The strength of small businesses has been put through the fire in the past year-plus, and 2021 saw a surge in buyer demand for companies who have survived the pressure. With the record number of company sales that rushed to close by the end of 2021, owners who did not sell by year-end may wonder if they missed an important window of opportunity. The good news for those owners is that not every buyer found the deal or the business they wanted in 2021, and demand remains high.
The continuing demand is being fueled on the buyer side by a combination of folks (primarily “corporate refugees,” forced into retirement in 2020 and 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 COVID-related challenges, there is still a smaller-than-normal number of owners prepared to put their businesses on the market. This all adds up to a supply and demand situation resulting in higher valuations and sales prices.
Simply put, if you are thinking of selling a business in 2022, it may end up being to your advantage. The 2021 abundance of capital and financing didn’t go away when 2022 rolled in, so you may receive more attention in 2022’s smaller seller market while the pool of qualified buyers remains large.
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. 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 labor shortage, many small business owners are having to adapt to major operational changes, primarily the shift to a more digital environment. What began as survival responses to the demands of the pandemic now are becoming permanent. Interestingly, one of our most common recommendations for increasing the value of a business is to increase your online presence. Overall, the past year’s 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.
Even if your company has not increased (or established) its digital footprint, if your business has still been thriving without a digital presence so far, this could present an attractive growth opportunity for a prospective buyer. Additionally, if you simply are not interested in changing your operations to incorporate technology or other industry trends, this may be another driver toward selling your business in 2022, while buyer demand is still high.
If you are considering selling a business in 2022, 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 700 business owners over the past 25 years, and we are here to help you get the best result possible. Contact us today for a confidential valuation and consultation.