Why now is a great time to buy a business

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March 15, 2010 by Kendric Foultz

If the number one rule in business is to buy low and sell high then now is a terrific time to buy a business!

2009 was a rough year for the overall economy.  Businesses across the board showed revenue declines that haven't been seen in decades.  Many business owners who were planning on selling their businesses and retiring found themselves in a position where financially they had to either reduce their retirement expectations or continue to work.  Until recently, most were opting to continue to work, but now we are seeing more owners adjusting to the new reality and selling their businesses at today's valuations.

This is a buyer's market.  Over the last couple of years, many marginal businesses failed and their market share was absorbed by the ones that survived.  So as a buyer you are left with an opportunity to buy a business that has weathered the storm and has had its valuation pushed down, possibly below where it should be.  It is likely that most if not all of the down side is behind you and for someone who is going to own this business for the next five or ten years, you have a real opportunity to build some wealth along with an income.

Banks are starting to lend more, but only under tight criteria.  They are going to take a hard look at you and at the business.  If you don't have any specific industry experience or have a partner who does then  they are most likely going to deny the loan.  This is a good thing because this limits the potential buyer pool and therefore reduces the ultimate sales price of the business.  If the owner has been having a hard time finding a buyer who can qualify for a loan then you have a real opportunity to make a deal if you have cash.  Good Hunting!

How to Buy

Logos Member of the California Association of Business Brokers Member of the International Business Brokers Association Member of the M&A Source Holder of the Merger & Acquisition Master Intermediary designation, M&A Source's highest qualification Holder of the Certified Business Intermediary designation, IBBA's highest qualification Holder of the Certified M&A Professional designation from Coles College Trained by the National Association of Certified Valuators and Analysts to conduct business valuations