Should You Wait To Sell Your Business?

13/11/2008 by info.

In fact the same principle applies with shares and residential properties

What there is, is a tendancy for people to do is to look at the historical value of your house, business or shares you purchased and compare the value of those assets now.

They decide that if they would be currently making a loss on their investment if they realised their asset now, then they will keep it, but thats often the wrong decision.

Look at the value of high street banks in Mid 2007 HBOS shares were trading at approx £10.00 a share, early 2008 they were trading at £6.00 a share and you may have thought I won’t sell them now because I will have made a loss. What has happened since then, well they are now selling at £1.00 a share and by not selling a the start of the year the technical loss you have made has been much higher.

Now these shares may recover to a value of £20.00 a share in years to come but can you wait that long before you realise your investment?

Many people are now delaying the sale of shares, houses and businesses thinking that the value will increase. And of course they may increase in time. Over the long term people have made money in the property market and stock exchange.

But can you really afford to wait that long?

What people should be looking at is not the value of the asset now but to look ahead and try to establish what the value of the asset will be within the time frame that they would NEED to sell.

Coming back to your businesses value, the questions you would need to ask are?

When do I need to sell?

When I need to sell, will the recession have negatively affected the value of my business? I.e will the profitability have reduced in that time frame.

It may be your competitors that go out of business leaving you with a higher market share, but they may be in a stronger postition that you.

If you want to sell in 2 years time why should you not place the business on the market now? Surely it is better to sell now for £100,000 than in 3 years time for £50,000?

The effect of delaying the sale may mean that you have effectively worked for 3 years for negligable reward, as the profits have been reducing and the value of your business has been reducing.

Should you wait to sell your business?

The answer is if you are in your late 50’s definately not, if you have plans to emigrate definately not but if you intend selling your business in 10 years time then you should carry on trading.

People are still buying businesses and many will have redundancy money looking for an investment, they wont be concerned with business values in 2 years because they will be trading for the next 10 years. And will still want to buy your business.

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