Niche Exit Planning Tactics
Selling a Wire Rope and Cable Business
The decision to sell your wire rope and cable business isn't something that should be taken lightly, especially these days. If a business exit is on the horizon, you'll want to check out our suggestions for staying ahead of the market.
Business buyers are a timid lot, even more so now that they are facing an uncertain economic landscape.
But the good news is that there is still demand for wire rope and cable businesses that present well and offer solid earning potential.
Legal Concerns
A basic understanding of legal requirements is foundational for a successful business sale. Despite the confusion that exists among many sellers, the essentials of the sale are described in the Letter of Intent, a seminal document that is created prior to due diligence . If you are seeking buyer concessions, the time to address them is before the Letter of Intent is drafted. So after consulting with your broker and attorney, make sure you're comfortable with the terms of the Letter of Intent. If not, everything you do to close the sale of your wire rope and cable business may be a waste of time.
Timing the Market
Now may be the best time to sell a wire rope and cable business. A depressed economy means lower interest rates; lower interest rates increase the number of investors willing to take a chance on wire rope and cable businesses. When the economy recovers there will be more wire rope and cable business buyers on the market, but higher interest rates could present challenges. So we see market timing as a concern that can be easily mitigated by applying fundamental sales strategies and adequately preparing your company for buyers.
Business Valuation
The methods for valuing a wire rope and cable business vary according to your business model and circumstances. However, there are generally three valuation methods appraisers use to determine your company's worth. The income method determines value based on the amount of income the business is expected to generate. The asset method, on the other hand, is based on the value of tangible and non-tangible assets (e.g. brands and trademarks). In many sales, the most accurate valuation comes from the market method which determines value based on the recent sales of similar businesses. As a safeguard, consider conducting appraisals using variations of multiple appraisal methods. But regardless of the method that is used, it's always in the seller's best interest to increase revenue and asset values prior to a sale.
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