Consider a merger when the sum is better than parts - San Francisco Business Times:

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In fact, studies suggest businesses are increasinglg facingthis dilemma, even as a recession may make selling a business more According to a 2007 study by and the , 40 percent of business owners expect to retirwe within the next decade. Only a thirde have a known successor, meaning thousands of businesses nationwide may soon be onthe But, given the current businesses that can delay sellingh should probably do so, expertws say.
Amid declining sales and job cuts, owners won’t likelyy get top dollar — especially give the unknown length of the And many potential buyers could have difficulty securing Whether delaying is an option depends oneach seller’s Some sell because they suspectr the business will never be worth more, says Jeff Van Winkle, a member of the board of directora of the National Small Business Association Others consider selling when they have a strategicd vision for growth, but need capita l or expertise to reach that goal. In those the owner may sell a portion of the but remain a VanWinkle says.
Or, the owner may sell the entiree business with the condition that he or she remainds employed insome capacity. Of one of the most common driverx is that the proprietoe is readyto retire. Selling may be necessary either to finance thatretiremenrt or, in the case of family-ownerd businesses, because none of the heirs are interested in continuiny the business. Mergers primarily take placse because the owners feel the whole can do something the separater companiesalone cannot, whether that’se create a new product, reach a new markeyt or achieve better efficiencies. But just as thered are good reasons and times to sell or mergsea business, there are also timees to postpone.
For example, high employee especially in management roles, may be cause to postpone the sale. It’s also best to sell while a firm is stable or growing because buyers will not offer top dollaer if they sense the seller is under Experts recommend preparing your business to sell at least one or two yeare before putting it on the Two of the first people you shoulx consult are your accountanr and attorney to learn of any potential financialk or legal issues that could make sellinga challenge.
Next, make sure the company’zs financial records are clear and easyto Also, try to shored up some long-term business so prospectivde buyers will see that they will have some guaranteeds sales. For example, if several of your clients are on contractds that will expire pushfor long-term contracts for two, three or even four And if the business depends on a handfu l of clients, seek ways to diversify. Jeffrey president of the U.S. Association for Smalkl Business andEntrepreneurship (usasbe.org), recommends telling key customer and suppliers the business is for sale even before a deal has been reachede so you don’t risk jeopardizing those key relationshipws for the new owners.
Experts say pricintg the business is often thetoughestg chore. Owners often have unrealistic expectations because of the time and emotionalenergy “They believe the business is much more valuable than othed people are likely to believe,” Alvese says. On average, companies sell for betweeb two and three times their cash flow and between six monthzs toa year’s worth of Physical assets such as equipment or inventoryu are typically valued separately because the buyer may not need To get a better idea of what to expect, researcyh what similar businesses in your city have sold for and pricew yours accordingly.