Selling a business and achieving liquidity is likely to be the single most important financial event for a private business owner. Timing is perhaps the most critical factor to securing maximum value in the sale of a business.

Typically there are three different types of timing associated in the sale of a business: seller timing, buyer timing, and market timing. Examples of each are provided below:

Key Factors that Drive Timing

Seller Factors: Lack of capital Growth beyond comfort level Boredom / burnout Other interests

Market Factors: Favorable economic climate Low interest rates Advantageous tax treatment Government regulatory changes

Buyer Factors: Meeting growth expectations Slow organic growth Increasing competitive pressures Diminishing market share Globalization of industry

While numerous factors may drive a seller to seek immediate liquidity in their business, unfortunately, the needs of the buyer and the conditions of the market ultimately dictate timing and value

Determinants of market timing

* Market timing is critical when evaluating the right time to sell a business. The economic climate, interest rates and the tax and regulatory environment all impact timing.

* Interest rates are at historically low levels, reducing required rates of return on investment ("ROI”) for premium buyers of companies. Lower required ROIs allow premium buyers to pay more for acquisitions than ever before.

* Low long-term capital gains tax rates are allowing sellers to retain more value than ever before. Currently, a seller can enjoy a 15% long-term capital gains tax rate (the lowest in history).

Determinants of buyer timing

* Public company premium buyers are pressured by Wall Street to meet revenue growth and earnings e

xpectations. These buyers therefore actively monitor buying opportunities in order to rapidly improve upon limitations or weaknesses in their businesses. Premium buyers purchase companies to increase market share, expand geographically, acquire new products and gain competitive advantages.

* Favorable accounting treatment for European buyers ending in 2005 has spurred cross-border M&A, driving up values for businesses and forcing U.S. buyers to match European offers in order to compete effectively.

Understanding and taking advantage of timing will ultimately lead to highest possible valuation for your business.

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