Guides

Quick Start Guide to Business Valuation

As you consider your own exit strategy, you should also keep in mind the macro-economic forces – and demographic forces – around you. Those forces will surely impact company valuations – both for the near term and for the long haul.

For instance, M&A (merger and acquisition) activity within the small business sector is expected to accelerate now through at least 2022, according to Business Renewal Solutions, an industry think tank.

Roughly 250,000 private businesses in the United States typically change hands each year, the firm reports. But as the Baby Boomer generation approaches retirement age, that number will more than double to more than 500,000 businesses per year, Business Renewal says. In total, more than 7.7 million business owners will be looking to exit their businesses over the next 10-15 years. Some estimate that these businesses represent over $10 trillion in wealth.

Those M&A trends are unfolding in the IT channel, according to ChannelE2E, which covers IT service providers from Entrepreneur to Exit (E2E). Some of the activity involves business owners “aging out” of the market. Other M&A deals involve IT service providers buying their way into specific vertical markets or regions. And the latest wave involves VARs and MSPs acquiring expertise in such areas as software development, cloud services, corporate compliance, the Internet of Things (IoT) and big data.

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