Business Survival: The Armageddon Calculation

When will the next economic downturn hit our business community.

As Dirty Harry said, “Do you feel lucky, punk?”

Here are some thoughts from professional business appraiser Daniel Hall on the value of selling NOW and not rolling the dice, hoping for later.

View on Valuations

What may be said with an air of flippancy, could be worth considering in a different context when thinking about our economic times today. Many years ago when my father would say “let’s make hay while the sun shines”, I knew enough to look for the nearest tractor bailing hay and not question that admonition. I catch myself thinking those same words today but in an entirely different setting when I hear our political leaders cheer about another glowing economic report or jobs growth indicator. Yes, we are rolling along pretty well economically now but as business valuation professionals I think we have some responsibility to point out to our clients that it will not always be a clear and sunny day in the proverbial economic hay field. Our lead news article this week points out that one of the leading causes of job losses is the closure of businesses due to the retirement/demise of aging business owners. Holding out for the highest transaction price possible when trying to negotiate the sale of a business may not always be the wisest choice when we are this late in the economic game. No, the financial world may not end tomorrow but it will not be long before the economic events of September, 2007 could begin to replicate themselves and then the exit door may be closed. Business valuation is said to be a forward looking exercise and realizing that storm clouds are gathering on the horizon is a fact to be considered and addressed in our valuation process.