Is 2022 A Good Time To Sell My Business?
The high market demand for businesses and the labor shortages that are putting pressure on small businesses make 2022 a great year to sell your business. Many business owners begin to evaluate timing their business sale at the end of the year and ask themselves when to sell my business.
Given the impact of the pandemic and recovering economy, we suspect that more business owners than normal plan to sell their businesses in 2022 due to uncertainty in the economy, as well as possible tax increases.
When to sell my business? Consider both supply and demand
Over the last year, small business strength was put to the test. There is an increase in buyers willing to pay cash as many businesses recover. The value of businesses has been steadily rising due to increased consumer demand. According to BizBuySell, there is more demand for business, so you could make some extra money if your company sells in 2022. Timing your business sale is a significant factor is achieving the best outcome possible. The timing of 2022 according to most essential sources points to one of the best year possible for business sellers.
When to sell my business? Consider labor shortages
There has been a labor shortage in all sectors of the economy this year. You can make plans to fill key positions but a shortage of labor may be the reason that you decide to sell your business in 2022. This shortage will not affect all businesses. Some may choose to stay put and wait, while others might decide to go out of business before there is more talent.
When to sell my business? Consider tax consequences
There is potential to raise capital gains taxes rates during the Biden administration. Forbes reports that the proposed 39.6% capital gain bracket will apply to taxpayers who have earned more than $1 million (or $500,000 for married filers separately). It would be indexed to inflation for 2022. This won’t impact most small-business owners but it could affect you if your earned income exceeds $1 million. Congress has not yet acted on the proposition but it’s a smart idea to consider future tax developments when selling your business.
From the increased demand for businesses on the market to the stress placed upon small business owners by labor shortages, 2022 could be your year. Contact Certified Business Brokers Houston if you’re interested in selling your company. To evaluate and plan the next steps to a sale, we will set up a complimentary consultation.
There is no need to worry for most people
Biden repeatedly stated that tax rates would not rise on people earning below $400,000 per year. There are many gray areas that remain to be clarified. It is not known what tax laws will change regarding itemized deductions and phase-outs.
We can be fairly certain that there will not be any tax increases in 2021. You still have time to prepare for possible changes. You don’t want your tax law to change so you shouldn’t rush to act. Planning is all about being flexible. It’s all about timing. The right time is now.
So when is the best time to sell my business?
It is best to sell your business when all or most of the following factors are in play
- Stock market hot/high.
- Interest rates are low
- The inflation rate is low.
- Financing is relatively easy
- The market is very frothy.
- Business buyer demand exceeds business opportunity supply.
- Your business is performing optimally.
- You are ready to to sell and let go of the business
Baby Boomer Bonanza
Given that we are entering the largest business transfer period ever in American history, due to the baby boomers retiring, it is a very good time for those who own high-performing businesses in various industry sectors to sell. Even companies that are not performing well could sell at a favorable time due to current prices and high demand. Augment your chances for sale and sales price by addressing any issues before you go on the market. Make your business as desirable as possible to reap the rewards.
For those business sellers not yet ready to sell, it is important to understand the factors that make your company salable. Learn about the selling process, and what you can expect. Educate yourself on exit planning, particularly if you are 3 to 5 years out. The choices that you make today can have a substantial impact on your bottom-line.Consider your business from a buyer’s point of view. Would you buy your business? Identify any problems in your business that could hinder or delay a sale and resolve them.
Bottom line: Markets change rapidly and business values also change. It’s better not to think back at this fortunate time but to know that your company was sold at the right moment. This window of time is your chance to enjoy your golden years with the peace of mind that comes from a successful business sale. Prepare accordingly.
Contact Mission Peak Brokers for your no-obligation, no-pressure business sale consultation. Our business brokers are highly experienced and have the requisite expertise to help you achieve a successful outcome in the sale of your business and to help you determine when to sell my business.