Looking to sell your company and retire off the proceeds? Think again. Because of these recessionary times, banks are unwilling to lend cash – meaning that it is harder and harder to sell your company because buyers usually can’t borrow more than sixty percent of the selling price.
Everyone is skittish. And many business owners aren’t rueful of not having sold when they had that proverbial chance. It is harder than ever just to stay in business, and while the actual value of your organization might not have declined much, if declined at all, it’s merely an extraordinarily bad time to be in business – or to try to sell one, even a successful one.
And regrettably for many owners, they increasingly have to work out alternative payment schedules, more akin to a loan except where profitability is concerned. However, all isn’t lost if you’re determined to sell your company.
For one thing, the tax rate right now is at historical lows, though many professionals expect it to go up, to twenty percent from the current fifteen capital gains rate, in one more year or so. This means that your after-tax income from a sale right now could be higher than if you wait for the economy to improve and take a hit from increased taxes.
Obviously, it’s tough to let go of the notion that your company is still worth what it was during the economic boom years of just five years ago. But it’s essential to cut your losses, as it were, while you still can and get out before you put any more time, or even money, into a company when all you want to do nowadays is retire to the good life. After all, isn’t that why you’d worked so hard through the years?