If you’re looking to buy or sell a business, you need to read “The 2010 Business Valuation Guide” in the November 2010 issue of Inc. Magazine.  The article reports on business sales and prices through March of 2010 – strong cash flows and profits attract buyers but the market is tough for many small businesses.

Generally speaking, the article talks about the difficulty many small businesses owners have in selling their businesses.  A major reason is lack of credit available to buyers for both the acquisition and for operating capital.  What is described nationally is also true for Lexington and Central Kentucky.  As a result, marketing times are longer and sale prices are lower than a few years ago.

For buyers with know-how and cash, this is good news as business opportunities may be acquired at somewhat lower cost relative to earnings than in the recent past.  But, for buyers who must borrow a significant portion of the purchase price, options are very limited.

For sellers, this story is sobering: it’s harder to get a deal done even at a lower price.  The real concern, however, is demographics – maybe 70% of privately held businesses will offered for sale over the next ten years as baby boomers retire, possibly putting downward pressure of values for years.  A smart strategy may be to sell sooner rather than later and engage a professional business broker to maximize the chances for a successful transaction.

Follow the link below to read the article.  Don’t miss the link to the chart “How Much Is Your Company Worth?”