The past few years have tested the resilience of small business owners, who have had to grapple with challenges ranging from a global pandemic to labor shortages and most recently, inflation. As we begin 2024, Southwest Florida business owners are faced with a pivotal question: is this the right time to sell my business? Despite the past year being a tough climate for selling, the current economic environment presents circumstances that could make 2024 an optimal year for those contemplating a business exit.

Economic Conditions

With markets rebounding from the challenges of the past few years, buyers are eager to invest in profitable businesses. Interest rates are starting to come down and the economy is entering a period of steady growth, where it is not growing so fast that we should be concerned about interest rates and inflation spiking again. This economic upswing creates a favorable environment for sellers, providing an opportune moment to command premium valuations for their businesses. Valuations for many private and public companies are already rising in anticipation of 2024 being a good year for business.

Buyer Demand

The past year has seen a slowdown in business transactions due to various economic uncertainties. Many investors were waiting to see if things would get better or worse. This has resulted in some pent-up demand among potential buyers looking for lucrative new business opportunities. Since interest rates are slowly beginning to drop the lending environment has also become more favorable. When lending conditions are good, M&A activity increases. Business owners looking to sell in 2024 stand to benefit from this surge in buyer interest, which should result in a competitive M&A market.

Preparing to Sell

Favorable economic conditions and resurgent buyer demand won’t necessarily make it easy to sell. Buyers will be more optimistic, but still cautious about making big investments, and thereby more selective. If you are planning to sell you should start the process as soon as possible, as it may take several months to properly prepare your business before putting it on the market. This will help you to combat a rigorous due diligence process.

As part of the process of preparing to sell a business, here are a few key items to focus on:

• Understand what deficiencies or weaknesses need to be addressed. These may have to do with your facility, staff, equipment or your business processes to name a few. Develop a plan of action for resolving as many of them as you can.
• Organize your financial documents. This includes bringing your bookkeeping up to date and preparing 2-5 years of financial records.
• Don’t make yourself irreplaceable. A strong business can be successful without its owner. Make sure your management and employees can run everything without your intervention.
• Develop a financial plan. Knowing how much you will need to sustain your lifestyle after selling will determine how much you need to sell for and if you’re even ready to sell.
• Have a growth plan. An executable plan for how your company can realize its full potential is an excellent marketing tool and can increase the value of your business in the eyes of investors.
• Know the true value of your business. You may think you know how much it’s worth, but the only way to know for sure is to get a 3rd party valuation.
• Surround yourself with an expert transition team. Most business owners only sell one business in their lifetime, but some professionals make a career of it. Start with an experienced business broker who can perform a valuation of your company and guide you through preparation, marketing and negotiating without making costly mistakes.

In the process of selling a business, reading the signs and navigating the market trends is crucial. As we assess the landscape of the year ahead, the alignment of buyer demand and steady economic growth makes this a compelling year for business owners to consider a strategic exit. Like any market trend, the current level of optimism will not last indefinitely. If the idea of selling your business has been percolating, now might be the time to explore opportunities and leverage the emerging seller’s market.

Even if you don’t plan on selling this year, preparing for your eventual departure will help you to move quickly when you are ready. Contact Corporate Investment Business Brokers (CIBB) to determine whether it makes sense for you to sell your business in 2024. We have been working with business sellers in Fort Myers, Sarasota and Naples for nearly 40 years, helping them to prepare for their eventual exits. While the market is favorable, every situation is unique, and a personalized approach can help you make an informed decision.