Should I Sell My Business During an Election Year?

Running a business is a wholly immersive experience, where each and every day presents new challenges and obstacles to overcome. As a business owner, you often develop tunnel vision, focusing solely on internal operations. But at certain moments you may be forced to reckon with external factors, like presidential elections.

This tunnel-vision style is really a protective coping mechanism and makes sense because extreme levels of entrepreneurial focus - and even obsession - are often necessary to make a business venture successful. In fact, your ability to stay laser-focused has most likely contributed to your success over the years. Business owners create and take action. They don’t merely think about things or write about them. They do things, and as you know, it takes immense effort to make something out of nothing.

When to Shift Your Focus Outward?

Election season can be an uncertain one.

Now, as much as you may be focused on the inside world of your company, there is a real outside world too. You might interact with it sparingly, but it does exist, and at certain times it becomes necessary to deal with this reality. The blinders should come off from time to time so you can look around and absorb what is happening outside the walls of your creation. 

In America, the presidential election every four years is one of these external factors that introduces uncertainty that can impact the economy and specific sectors. The heightened political climate can affect investor confidence and lending practices. Consequently, some investors may adopt a wait-and-see approach, scrutinizing opportunities more closely, or demanding more favorable terms to move forward with an investment.

The external reality is that perceived risk and price are inversely correlated. As the sense of riskiness goes up, the price offered goes down. Consequently, these times can be inopportune for sellers, particularly after working so hard for so many years to build your business.

As a business owner, you are zeroed in on what you can control in your corner of the world.  However, these external factors outside of your control can come into play at a bad moment for you and your business if you’re not careful. You may be surprised if you find yourself in need of access to capital during the run-up to an election and even post-election if there is a change in administration. Very often equity investors and lenders can get skittish until the cloud of uncertainty clears. Not only can terms get tougher, but some deals simply cannot get done until clarity around new policies is reached. What might be a routine financial transaction in normal times can temporarily become a challenge to get done at all.

The best thing you can do to be prepared, as always, is to focus on running a sound business that is fundamentally strong, well-capitalized, and not reliant on 100% of your plans coming to fruition to thrive. It may sound trite, just too simple, but getting back to basics, aligning behind a clear vision and purpose, and following proven processes will set you up best for success in any conversation you may need to have good times, as well as difficult times. 

Preparing to Sell Your Business?

No matter when you’re planning to exit your business, make sure you are in a position of strength.

It’s always preferable to enter a conversation from a position of strength, with more than one potential option available. If you’re in that scenario and you’re on a tight timeframe to exit or make a deal, by all means, move forward. The worst that can happen is you won’t make a deal and continue with the status quo.

However, if you’re not on a tight timeframe to exit or make a deal, we would advise considering taking the same approach as investors in these times.

Wait-and-see. 

While you wait, focus on improving your business. Be prepared to take advantage of opportunities that might arise in turbulent times, when your competitors start to wobble or market upheavals are taking place. At the same time, you will also be ready to be a seller when the time is right and market conditions are most favorable.

This is just one of the ways Doescher Group helps to level the playing field for self-made business owners; by seeking to ensure that when you move on from this business you built, it’s a choice, on your terms. If you’d like to connect regarding your options for exit preparedness we’re here to help.