Sell Technology Business in 2018 For Peak Multiples
If you are thinking about selling your technology business, 2018 is the perfect year to take action. The current trends of rising interest rates, a market that strongly favors sellers, and peak valuations across all asset classes are just a few reasons why you should sell your technology business in 2018. Ready to learn more? Here are just some of the reasons why 2018 is the ideal time to sell your tech company.
Rising Interest Rates
Interest rates are still relatively low, but they might not stay low for much longer. Consider this: the Federal government increased the interest rate three times in 2017 and more increases are expected this year. In fact, many market observers believe interest rates hit their lowest levels in 2016 and that they will only continue to rise.
10 Year Bull Market
We are currently in the midst of the third-longest running bull market in US history, which promotes buying and is extremely favorable to sellers. The Dow Jones Industrial Average jumped 260% since March 2009, and if the bull market continues into August, it will become the longest in history.
But a closer look at Dow Theory indicates that the bull market is vulnerable and could change unexpectedly. The current bull market still favors sellers, but the trend could shift without much warning. If you are considering selling your tech business, you should do it now while the market is still favorable to sellers.
Record Stock Buybacks
In 2018, stock buybacks are at an
Buybacks Create Very High Price to Earnings (P/E Ratio) for Public Companies
Another reason 2018 is a great time to sell is that Price to Earnings ratios
When a company’s P/E ratio is high, this indicates that the market is expecting good things from it over the next few months or years. This means it is an ideal time to sell your business
Significantly More Debt Since the Recession
Since the Great Recession hit in 2008, debt has increased greatly in most G7 economies, including the United States. World debt is much higher than it was in 2008, including personal, business, municipal, state and federal debt.
This could actually benefit
There are two main types of sales, stock sales
Inflated Commercial Real Estate
This probably won’t come as much of a surprise, but the price of
What does this mean for selling your business? If you are located in a major city like Seattle where the cost of
Limited Office Space in Seattle
Seattle has been in the news quite a bit these days, especially when it comes to commercial office space. The fact is, Seattle currently faces a shortage of commercial vacancies. The vacancy rate is estimated around 5.8%, which translates to fewer vacancies than New York City or Los Angeles. A big reason for this is the migration of tech giants into the Seattle area.
This shortage of office space can work in your favor if you are looking to sell your business. Many buyers consider it desirable to purchase a company that already has an established office space.
Assets in All Categories are Priced at Very
In the current market, assets in all categories are priced at very low or zero percent interest rates that can only go down as rates rise. When interest rates rise asset prices are likely to fluctuate widely, and assets are also worth more at a lower interest rate. If you are looking to get out of the business, it is worth selling as soon as possible, when the interest rates remain historically low.
It’s a Seller’s Market
Another reason why 2018 is a great time to sell is that buyers currently out-number sellers, making it a seller’s market. Quality, profitable business
The baby boomers own approximately 66% of small to mid-size companies, and when they begin to sell en masse, there will be a surplus of businesses for sale. The market will then begin to change to a buyer’s market. The bottom line: take advantage of the seller’s market while you still have the chance!
To Sum It All Up
These are some of the most important reasons why 2018 is a perfect time to sell your technology business. When all these factors are taken into account, they create a situation that is extremely favorable to tech owners looking to exit their technology business. If you are thinking about selling your company, now’s the time!