When is the best time to exit a business?

When is the best time to exit a business? The answer, says David Moore, principal at BlueChip Mergers & Acquisitions in Charleston, is it depends. For most businesses, this happens to be that moment when all the conditions are aligned for peak valuation, high demand, and easy financing.

Moore suggests potential sellers consider this confluence of factors suggesting the time is right now.

1. The Capital is Available

Interest rates are low. That is fortuitous to business owners seeking an exit plan for two reasons. First, it means individuals with wealth don’t have high-interest options to park their liquid assets. They are seeking higher-yielding alternatives, and the stock market appears to be near peak valuation, with a PE ratio, about 50% above the historical mean.

Second, it means sellers can finance their purchase of your business inexpensively, allowing more of the cost to inhabit the purchase price.

2. Charleston is Not a Corporate Town

Without any headquartered Fortune 500 companies, Charleston doesn’t offer the kinds of jobs that draw executives expecting multiple-six-figures salaries. The only way to earn that kind of income is to start or purchase a business. That leads to the next condition.

3. There is a Lot of Demand to Buy

A plethora of closely held businesses and an influx of high earners have created pent-up demand to purchase businesses. “It’s a seller’s market,” says Moore.

4. The Economy Here is Booming

All the economic markers suggest the current business boom in the Lowcountry will not slow down. Boeing, Volvo, and Mercedes continue to draw vendors, the Port of Charleston and Charleston International Airport are both expanding; people are pouring in and creating demand for more services. That increases the forward-looking valuation of your business and makes it more desirable to buyers.

5. The Flipside of a Booming Economy

Any business owner knows that markets ebb and flow. If you’re near the end of your ownership run, it’s good to get out before the next economic dip arrives. Buyers generally have long-term horizons, but sellers want to

maximize their sale price and nothing else. Current macroeconomic conditions suggest we might be near a peak.

6. Baby Boomers are Aging

The middle of the Baby Boom turns 65 this year, meaning Boomers will begin exiting their businesses in ever-increasing numbers this decade. That will likely balance the market dynamic in favor of buyers. Getting out before that rush could return top dollar.