It looks like PROFIT columnist Wayne Vanwyck may be on to something. This month, he urged business owners to sell now ahead of the imminent tsunami of company sales due, in part, to retiring boomers. According to a new report from the Canadian Institute of Chartered Business Valuators (CICBV), the perfect storm has arrived.
“On one side, there is pressure to acquire. Opposite that, there is pressure to retire,” says CICBV spokesperson Sue Loomer. “It’s good timing for everyone.”
A January 2013 report released by RBC confirmed that Canadian companies were ready and able, but not yet willing to invest. Canadian companies are sitting on about $300 billion. According to the CICBV, they’ve been keeping money in reserve, almost as an insurance policy during uncertain times.
Loomer believes that Canadian businesses are about the heed Bank of Canada Governor Mark Carney’s call to stop sitting on “dead money” and deploy the billions of dollars they’ve been holding onto.
According to the CICBV’s new video report, there are more buyers with more money than there have been in years. At the same time, thousands of baby boomer owner-operators, in both Canada and the Umnited States, are finally positioning to engage succession plans and attract strategic buyers.
With business leaders struggling to grow organically, the CICBV is betting that strategic acquisitions will to grow to fill the void.
So, is it time to sell?
Loomer says there will come a point when Canadian companies feel their balance sheets are strong enough to start looking for good opportunities to put that cash to work—and it is imminent.
“Merger and acquisition stats are picking up from what they were a few years ago; the same with private equity investment,” says Loomer.
Not every business is looking to be bought, some are just looking for investors (not to worry, the market for investment and acquisitions is fairly similar). Whichever type of cash infusion you’re after, the message is the same: be prepared.
Loomer, who is also managing director of Campbell Valuation Partners Limited, says every SME should know what their business is worth in preparation for a sale. In both cases, those with the cash are more cautious than they used to be, which means businesses need to be prepared to make a case for themselves.
“The most important takeaway is that if you’ve been waiting for the right time to sell, you need to make sure your business is ready for acquisition when the opportunity arrives,” says Loomer. “Run your business like it’s always for sale.”