A study was just released that should be read by anyone looking to buy or sell a business. Whereas most studies are done by Business Brokers, M&A Intermediaries, or consultants with an agenda, this study was performed by the Ewing Kauffman Foundation. The study attempts to answer the question of whether or not a recession, or economic downtime, is the best time to buy a business for sale.
On the surface, we have often professed that a recession is the best time to start of buy a business for sale. This is due to three main reasons:
Your competition is constrained, or eliminated. No better time to attack the enemy than when they are weak. They will not have the energy or resources to fight back.
Customers are looking for a new source. Recessions and downturns in the economy force all people and entities to rething the way they are spending, and possibly remodel their businesses. This means looking at their current vendors to make certain they are providing the maximum value. You can get appointments with potential customers that you might not have been able to otherwise.
Your competition is not as flexible as you, and you can refocus your business to take advantage of opportunities that they could not.
employees, facilities, and even such things as furniture are much more availble and inexpensive
When the recession cycle ends, the business owner is able to ride the entire wave on the upside of the cycle, as opposed to only catching the wave halfway up, or at the top, thereby missing the tremendous growth curve.
The study looked at 8,500 companies lanuched between 1831 and 2006 that went public between 1975 and 2006. The study measured "success" by whether or not the company had an IPO, or public offering in later years.
The results are somewhat confusing, since they did not track companies that did not go public – and therefore it is not known if these companies failed or were acquired by a larger entity. The study did find that less companies are started in recessionary periods, and that a lower percentage of those companies eventually go public. It summarizes by stating that "the relationship between company success and economic conditions at the time of a company's founding is not well understood"
Our experience has taught us that the best time to start up a company is during a recession. We would be interested in hearing what you think.
Princeton Capital Strategies, LLC
Value beyond a typical business broker
Mergers & Acquisitions (M & A)is a unique business opportunity to sell their business, but because most business owners only sell a business once in their careers, they learn too late how to work with business brokers, business valuation firms, and investment banks. Princeton Capital is an M&A intermediary in the CT NY area that provides value beyond that of a typical business broker. Princeton Capital can bring more qualified buyers to a business owner in less time, because our methods come from world-class investment banks instead of typical business brokers. 
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