Know When To Hold ‘Em
Exiting a business at its highest value requires business owners to have a deep understanding of their business, their industry, and the marketplace at large. As the publisher and businessman Malcolm S. Forbes said, “the best vision is insight.” Timing the market necessitates a business owner’s ability to recognize the not-to-often phenomena of “in the right place, at the right time.”
Although rare, bubbles do occur, and slightly more frequent than a bubble, roll-ups provide an opportune time to exit a business at a premium. Business owners who are fortunate enough to find themselves in a bubble or roll-up scenario should:
- Look for high activity within their industry;
- Identify competitors/other businesses within the industry selling at multiples of EBITDA greater than 5;
- Realize that bubbles usually last 3-4 years and rarely reoccur;
- Understand that the age of an owner should not deter exploration of a transaction (i.e. this opportunity may not occur again, or at least not with the same voracity)
The attune business owner, with the help of professional advisors, should always know the value of their business in the marketplace.