You have worked hard to build your business. You have put in the work, stood firm through the tough times, and rejoiced in the triumphs. You have seen your business grow into a thriving, successful organization. Now you are thinking about selling your business, but when is the best time to sell?
The time to sell is now!
In their most recent mergers and acquisitions (M&A) Market Update, M&A advisory firm ArkMalibu reported that pricing levels of business sales in Q2 2019 rose to “near-record levels.” ArkMalibu reported businesses selling at an average of 11.2x earnings before interest, tax, depreciation, and amortization (EBITDA).
Why is this significant?
According to the Corporate Finance Institute, the average sale price for public companies is around 8x of EBITDA, and 4x for private companies.
Why sell now?
These are some of the highest prices, relative to EBITDA, that business owners may see, and according to market history, the window of opportunity is likely nearing its close.
“The next 12-18 months will be the best time to sell as the multiples near their peak,” says Peter Kubasek, CEO and Founder of ArkMalibu. For business owners who are planning an exit strategy for the near future, the time to capitalize is now. Kubasek goes on to say, “If you are planning to sell in the next five years, your EBITDA will need to increase 75% to get the same value you would get today.”
These high pricing levels mean today’s business owners have a more significant opportunity to profit from the sale of their business. This opportunity allows them to increase their support to their families and favorite charities.
“Look at this as a stewardship opportunity. A way to invest in your family, your community, and the Kingdom,” says Kubasek.
How can The Signatry help?
If you are considering selling a business, don’t forget a charitable giving strategy. It can be a key tool in reducing tax liability. By giving business interest before the sale to a donor advised fund, business owners can receive a tax deduction and potentially even eliminate capital gains taxes. These tax savings allow for even further giving beyond the initial interest donation.
For more information, check out our business sale fact sheet.
Before selling your business, talk to one of our experts at The Signatry to learn how the sale of your business can have eternal impact.
Disclaimer: The Signatry does not provide legal, tax, financial, or other professional advice. You should consult professional advisors concerning the legal, tax, or, financial consequences of your charitable activities.