Headlines can be misleading, but the sky is not falling and it is still a very good time to sell, refinance or recapitalize a business.
IFA:
It is difficult to pick up a newspaper or magazine these days without reading about the dramatic changes taking place in the global financing markets. In March, many heard about a dramatic sell-off of U.S. subprime mortgage assets on fears of rising homeowner defaults. In June, readers learned that several prominent hedge funds had suffered heavy losses related to credit-backed securities. In August, the news was that global investment banks were sitting on a backlog of more than $330 billion in private-equity sponsored leveraged buy-out loans for which they could not find buyers. And in October, the International Monetary Fund warned that the U.S. credit crisis could affect global economic growth in 2008 and beyond.
The bad news seems to keep piling up, and many industry observers are claiming that the country is in the midst of a severe credit crunch and that the end of the ‘golden age of private equity’ has arrived. So what does this mean for the owners and managers of small- and medium-sized, franchise-based businesses? Is it too late to sell a company at an attractive valuation or to pay a dividend to shareholders? Should owners wait another two or three years for conditions to improve before raising the capital needed to grow the franchise system?
Consider looking past the headlines and focus on several important reasons why now might still be a very good time to consider making the next financial move.
No comments yet.