If you’re in the mergers and acquisitions business long enough, your pattern recognition becomes increasingly sharper, and you can see how external conditions affect business owners, for better or worse.
The most obvious example of this is how owners perceive challenged markets. If economic turbulence or political instability rear their heads, many owners feel the logical course is to simply wait it out.
Yet that’s often the worst thing you can, for myriad reasons. Some of those reasons are psychological, and some are market-related. And that assertion is backed up by the historical record.
The True Cost of Waiting
Let’s start with seller psychology. We’ve sometimes seen that once an owner’s mind is made up to sell, their relationship with the business begins to change. Strategic decisions become more conservative; the passion to innovate or compete wanes a bit, and they shift into maintenance mode rather than growth mode.
From a psychological standpoint, this is understandable. Owners want to avoid risk once they are mentally committed to getting out. Yet while the owner may not fully grasp this change, buyers (and employees) most certainly will not.
And here’s the kicker: Waiting is often the riskiest path of all. Market conditions may improve or deteriorate. Yet what happens if you lose a crucial client or key workers while you’re waiting? Tech disruption, regulatory chances, health problems and other unforeseeable developments can radically alter your business prospects.
The truth is your business risk can increase by multiples while you’re waiting for a modest market reversal. It’s an asymmetrical bet, and you’re on the wrong side of it.
What History Tells Us: Market Timing is a Myth
If you turn on the news, you’re likely going to hear a litany of concerning things as a business owner. Tariffs, political polarization, and the volatility of our current “kangaroo market” (not a bull or a bear but bouncing up and down) are dominating our headlines.
Yet if there is one thing we’ve learned after 25 years of working in M&A, it’s this: The best opportunities often come during periods of heightened anxiety.
Now, we get it: Selling a business you’re operating in choppy economic waters sounds counterintuitive. Yet these are often the ideal moments to head for the exit. Even now, our firm is facilitating transactions that meet or exceed clients’ valuation expectations.
We’re not just basing this assertion on our own anecdotal experience, either. History teaches us the same lesson, over and over again.
If you look at recent history, virtually every year offers some problematic financial, economic or geopolitical context. Today, we have the prospect of tariffs, market turbulence, and interest rates that are elevated relative to the preceding decade. Yet the recent past was full of crises and disasters, the seriousness of which becomes somewhat diminished or forgotten over time.
In 2024, we had one of the most polarizing elections in history, complete with two assassination attempts, and persistent inflation. In 2023, the U.S. had a series of high-profile bank failures that dominated headlines, and global growth decelerated by more than 2%.
In 2022, we had the first major European land war since WW2. The conflict in Ukraine created an energy crisis that echoed throughout Europe. In 2021, supply chain shocks created global bottlenecks, shipping costs soared, and inflation ran wild.
2020 brought us the COVID pandemic and the worst contraction in the global economy since The Great Depression, including an oil price collapse so severe prices briefly turned negative.
Pretty challenging few years, right? The preceding decade was no cakewalk either, as it featured Brexit, a U.S. vs. China trade war, the Greek debt crisis, the Chinese stock market losing 1/3rd of its value in a month and much more.
The decade before that? 9/11, Hurricane Katrina, Enron, several global wars, and the 2008 Global Recession, kicked off by a collapse in the housing market triggered by subprime mortgages and credit default swaps.
We could keep going, as the 1980s (Black Monday/savings and loan crisis) and 1970s (Vietnam War and national fuel shortages) also offered dozens of their own deep challenges.
Throughout all these troubled periods, one truth remained constant: If you have an exceptional business, and you know how to value, market and sell that business, you will transcend temporary economic or political headwinds and attract sophisticated buyers.
Other Factors to Consider
What else does history teach us about timing? First, waiting for a relative period of tranquility can easily result in you endlessly deferring action, missing the opportunities that are present. The truth is market turbulence is not the exception, but the norm, and opportunity cost should be avoided. Time is a finite resource. What are you foregoing by waiting a year, or two or three? What else could you be doing with a new venture or the rest of your life?
Next, business quality is everything. Market timing isn’t in the same stratosphere with regard to sales considerations. If you have strong fundamentals, durable competitive advantages, a great team of workers, then buyers will come no matter what the broader market looks like.
Finally, an experienced hand at the wheel is even more valuable during times of uncertainty. Those historical events we just discussed? Our company was facilitating the sale of businesses during almost all of them. And we’ll be doing the same during next year’s challenges, and for many years after.
If that doesn’t set your mind at ease, consider this: Many buyers prefer to seek transactions during challenged periods. Private equity firms have record stockpiles of capital, and that creates pressure to deploy it. Strategic buyers often feel they get the best opportunities during uncertain periods and adopt contrarian, countercyclical strategies to help them strengthen market position or acquire new capabilities.
The Final Word
Great businesses always find buyers. I can’t put it any simpler than that. Instead of incurring added risk by trying to time the market, focus on building durable value while staying attuned to your personal readiness for an exit.
When those factors converge, we will be right here, ready to talk, in any market climate. Just like we’ve done for 25 years.
