The Business Bulletin
Is a recession the best time to buy (or sell) a business? Walt Disney has been quoted as saying: “I’ve heard there’s going to be a recession. I’ve decided not to participate”. I couldn’t find if it was a genuine quote or one of those internet quotes, but I like it nonetheless. And I see my clients seem to adopt that attitude as well – so it must be correct, right?
Many of my clients see a recession as
Once you’ve identified a target
an opportunity, or more correctly as
business to buy, you’ll usually reach a
opportunities, as they rarely rest their
“heads of terms” agreement with the
laurels. They go again. The find the
seller, setting out the non-binding
next opportunity.
agreement in principle, what terms
For many, that opportunity is buying (or indeed selling) a business. There are always more sellers in a recession; people that want out, are
are agreed perhaps such as: ■ Purchase price ■ Payment schedule
fed up with it all, are just at the right age to enjoy retirement and so on. Their reasons are numerous, but find them at the right time and for the buyer, there lies the opportunity – the ability to buy a business at a discount, or at least at value as the current owner hasn’t effectively ran the business or seen the upside potential that the buyer now does. Rarely will someone sell their business vastly below value – usually a business valuation would be based on turnover/profit plus stock and assets – but there are a number of ways to value a business and some are easier to value than others. I’m not an expert on business valuation, but all I’m saying is that there is opportunity there.
26 | Issue 4 – Strategy and Personal Development
■ Conditions or restrictions ■ Anticipated date ■ Assets not transferring (if asset sale) The heads of terms document should be simple and almost all of the deal will be left to the legal documents which follow.
