Many companies have seen their revenue and earnings impacted over the course of the recession, and it has hurt their chance of a successful exit. Potential buyers, overwhelmed with negative news, took a very conservative view of the future outlook of the businesses they looked at. We had buyers take a look at a company with reduced revenue and say, “Yes, we agree it will probably go back up. But there is a chance it might decline further, so we are not interested at any price”.
With signs and talk of recovery, buyers are ready to take a harder look. They can sense that truly the only place to go is up, and up is how you make money. The same company of reduced but stable revenue turns from a high-risk investment where you might lose everything to a more traditional business acquisition.
The question becomes one of whether the current owner would like to hang on to the business for a number of years to ride it back up to a more lucrative and historical level, or sell now. That is personal decision, although the capital gains tax hike scheduled to take affect end of 2010 should cause business owners to really think about their ultimate choice.