Private equity firms are sitting on a ton of money. Here’s why they’re scared to actually put it to work.
Why does it take so long for an entrepreneur to sell their business these days?
I was having dinner with an veteran in the world of middle market mergers and acquisitions. “Twenty-five years ago, I could sell a small business in six weeks,” he grumbled. “Today, I consider it a miracle if I can close a deal in 6 months.” And while deals may rarely have closed in just six weeks, in general, the numbers back him up: Between 2000 to 2007, the average time it took to sell a small- or mid-size business to a financial buyer was six months. From 2008 to 2012, that doubled to 12 months, and I’ve seen deals approaching their second birthday.
This isn’t due to a lack of funds on the part of financial buyers. Private equity groups are sitting on $430 billion dollars – yes, billion with a B – and it needs to be invested in the next couple of years. The problem is that although the money is better than ever, the bar is set higher than ever.
…to read this article in full, visit leading US small business resource, Inc.