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Retirement Decisions: Sell Small Business Now Vs. Waiting


There are differing views as to whether Baby Boomers should sell their small businesses now to retire or wait to sell until the market gets better.  In “Why waiting to sell your business may backfire,” Emily Maltby of The Wall Street Journal says that millions of people own small businesses that they’ll be looking to sell soon for retirement.  But since the market is low now, she anticipates many of them working late into their 60’s and even into their 70’s in hopes that they can sell their business for a higher value when the market increases.  Working a few more years will allow them to delay receiving annuity income until a later date, which will increase their monthly annuity payments.  It can also help them strengthen their relationships with customers and gain more, which will be a big help in selling their business.

But there is the possibility that waiting to sell your small business will not get you the results you hoped for.  There might be millions of others who have also waited to sell their small businesses, so even though the market gets better, it could be saturated with small business owners looking to sell.  Thousands of business owners turn 65 each day, so it might be beneficial to sell now if you are truly ready for retirement.  Last year was the first year that Baby Boomers turned 65 and in the next decade, the number of Baby Boomers turning 65 will skyrocket.  Exit strategy consultant Steven D. Popell says that the crowded market he anticipates makes it better to sell your small business now if you are considering retirement.

Others don’t think that you need to rush into selling your small business right now if you’d prefer to delay your retirement either to increase annuity payments or the value of your business.  Andrew Keyt of Loyola University’s Family Business Center points out that if a business has value without the owner because of strong fundamentals, it is likely to find a buyer regardless of the markets.  Another thing to consider is the fact that there could also be an influx of buyers when the markets improve.  Many people looking to purchase a small business may be holding off until the markets show an improvement, so there will be a lot of buyers to match the small business sellers.  From the first half of 2008 to the first half of this year, the number of small businesses sold decreased by 40%.  If you are looking to retire and sell your small business, don’t consider the markets as much as what is right for you now.  If your business offers good value with customers, assets, and net profits, you should be able to find your buyer now or later.

Written by Rachel Summit

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