Around the Web: A Week in Summary
A recent article from Divestopedia entitled “10 Options to Exit Your Business: Transfer and Liquidity Alternatives” reviews the pros and cons to be considered when choosing one of the following ten ways to exit your business:
- Selling to a Strategic Buyer
- Selling to a Financial Buyer
- Selling to a Partner or Co-Owner
- Transferring to a Family Member
- Selling to Trusted Staff
- Selling Via Employee Stock Ownership Plan (ESOP)
- Initial Public Offering (IPO)
- Passive Ownership
- Recapitalization
- Closing the Business
Each option should be considered given the context of the overall objectives (financial, legacy, success, timing and others).
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A recent article from Allan Taylor & Co. entitled “You Sell a Business for the Same Reason You Start One: Freedom” discusses the trade-offs a person chooses to make in their life when becoming a business owner. Often very similar to owning a business, there are trade-offs to selling a business as well. Choosing which value (time, money or freedom) takes precedence in your life is very important for making such decisions.
For example, preparing a business to be sold can take up to a year. Choosing to proceed with a short sale in order to avoid this lengthy process can cost the seller in the form of reduced sale price for the business. If time or freedom is the ultimate goal, then the short sale may be worth it, otherwise, waiting for the business to be properly prepared for sale may be the best course of action.
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A recent article from The New York Times entitled “A Record $2.5 Trillion in Mergers Were Announced in the First Half of 2018” analyzes the current state of the market and discusses the causes and potential effects going forward.
Mergers in 2018 are on pace to surpass the $5 trillion mark, topping 2015 as the largest yearly total on record. Much of the activity is driven by large deals like the union of CVS and Aetna, in efforts to fend off competition. Tax cuts and low interest rates in the United States create an encouraging environment for mergers and acquisitions for companies who are looking to grow, grab market share and reinvent their business models. Even cross-border deals have been on the rise despite increasing trade-war tensions. While the current state of the market may appear very attractive, a pickup in deal-making is not necessarily a positive sign. According to history, peaks in merger and acquisition activity are typically followed in short order by a recession.
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