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Business Blog
November 5, 2008
The Most Valuable Companies in America
Investors are loaded with cash. Boomers are looking to buy. Foreign firms are eager to invest. What does that add up to? A seller's market for your business.
A lot of the economic news these days seems depressing, but there is at least one reason to remain optimistic: It's still a great time to sell your business.
Supply and DemandMeanwhile, cost cutting and downsizing in corporate America always lead to an uptick in entrepreneurship. Many of those corporate refugees will become consultants or start businesses from scratch.
Companies in hot growth sectors
Technology and software. If offer custom programming services, you can expect to sell your company for two to six times revenue.
Energy. Petroleum products, oil and gas drilling, and related services are hot. Even untested, largely speculative businesses attempting to drive the next wave of clean energy can garner big multiples.
You can expect other sectors to begin cooling off. In recent years, for example, there have been plenty of deals for residential construction firms and suppliers of items like cabinets and floor coverings. But the weakening housing market will make those companies risky propositions.
The Boomer EffectAn estimated 65 percent to 75 percent of the small companies in the U.S. -- some 10 million -- will likely hang up a "for sale" sign over the next five to 10 years. Why? Retiring baby boomers. "While it has historically been a seller's market, we're on the cusp of shifting into a buyer's market," says Stabler. "The children of the baby boomers have moved on to other things, so with no one to pass the business to, they have no choice but to sell." The likely result? An oversupply of businesses for sale -- and an end to the current seller's market. In other words, use the following pages as a guide to what you might expect to sell your business for today, but maybe not tomorrow.
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