By: Patrick Ungashick
The next recession is coming!
One does not need a Ph.D. in economics to know that an economic recession is coming. The hard part is predicting when it will hit, and how badly it will be. Given that we are currently in the ninth year since the previous recession ended in late 2009 to early 2010, it is reasonable to conclude that we likely are closer to the next recession than we are to the last.
We will let professional economists predict the next recession’s date and depth, and instead, examine what a recession means for business owners thinking about exit. The critical implication is that a recession can delay or block you from achieving your exit goals. For example, depending on your industry, and the strengths or vulnerabilities within your company, a recession potentially can:
- Force you to delay your exit timetable, typically by many years.
- Erode the value you get at exit, through the double-whammy of reduced company profits if your revenue and earnings have fallen, AND the prospect of selling at a lower multiple in the marketplace as demand for companies have fallen, and banks have tightened lending.
- Make it more difficult to reach personal financial freedom, due to the combination of reduced profits to take home prior to exit and lower sale value at exit.
- Reduce your ability to find a buyer or successor who is a good fit with your company culture and values.
For all of these reasons, you must have a clear set of criteria for determining when you should exit from your company, and what you must do to get your company and yourself ready. To start, consider watching this recent educational webinar on how to know when it’s time to exit. Then, contact us for a free phone consultation to discuss your exit situation and how to plan for the upcoming recession.