• About
  • Offices
  • Careers
  • News
  • Students
  • Alumni
  • Payments
  • EN | FR
Background Image
Bennett Jones Logo
  • People
  • Expertise
  • Knowledge
  • Search
  • FR Menu
  • Search Mobile
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
View all
Practices
Corporate Litigation Regulatory Tax View all
Industries
Energy Infrastructure Mining Private Equity & Investment Funds View all
Advisory
Crisis & Risk Management Public Policy
View Client Work
International Experience
Insights News Events Subscribe
Arbitration Angle Artificial Intelligence Insights Business Law Talks Podcast Class Actions: Looking Forward Class Action Quick Takes
Economic Outlook New Energy Economy Series Quarterly Fintech Insights Quarterly M&A Insights Sustainability & the CIO
People
Offices
About
Practices
Industries
Advisory Services
Client Work
Insights
News
Events
Careers
Law Students
Alumni
Payments
Search
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
 
Blog

Is an Economic Downturn a Good Time to Sell Your Business?

June 17, 2013

It may be counter intuitive, but selling your business during an economic downturn could be advantageous. That is, if it is done properly.

In a recent article in the Globe and Mail, Economic Slowdown Speeds Up Drive for Acquisitions, Jacoline Loewen discusses why owners of businesses should not necessarily shelf plans to sell their companies during an economic slowdown. In fact, the smart ones, she writes, actively seek out buyers during this time. Slowdowns make it harder for companies to increase revenues by building capacity through organic growth. Acquiring smaller businesses is a way for larger companies to continue to grow even during a downturn. However, in order to ensure a successful outcome, sellers must actively seek out buyers and determine in advance how their business and customer profile can add something unique to a particular buyer, what synergies and economies of scale would be achieved, and what their business is worth. On this last note, the writer argues that many sellers make the fatal mistake of conducting serial negotiations which can be a recipe for a poor valuation.

What the article does not mention is that selling during a downturn could also be prejudicial to sellers, as the purchase price is often based on a multiple of earnings, which would necessarily have to take into account the fact that earnings may be declining. Some buyers may also be more focused on cutting costs and preserving capital during a downturn rather than expending valuable time and resources on third-party acquisitions. This is not to say however that undertaking a sale during a slowdown cannot successfully be achieved.

In my experience, prior to undertaking a sales process, a smart seller will often have already gone through its own consolidation strategy whereby revenues and earnings are increased through one or more add-on or roll-up acquisitions. This process will often serve to prepare the seller for its own ultimate sale. Sellers would also be well advised to engage an expert business valuator who can provide an objective determination of a business's worth. A reputable M&A advisor could also assist in identifying target buyers, preparing a sales booklet (also known as a confidential information memorandum) and running a sales auction, all with a view to maximizing sales proceeds.

Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.

For permission to republish this or any other publication, contact Amrita Kochhar at kochhara@bennettjones.com.

Download PDF

Related Links

  • Insights
  • Media
  • Subscribe

Recent Posts

Blog

Major Change in Alberta Occupational Health and Safety [...]

May 26, 2025
       

Blog

Q&A on Cybersecurity and Family Enterprises: How to [...]

May 23, 2025
       

Blog

British Columbia Grapples With Evidentiary Issues [...]

May 22, 2025
       

Blog

Screening By the Authorizing Judge: Québec Court of [...]

May 22, 2025
       

Blog

Court of Appeal Cuts Off Speculative Product Liability Claims

May 22, 2025
       
Bennett Jones Centennial Footer
Bennett Jones Centennial Footer
About
  • Leadership
  • Diversity
  • Community
  • Innovation
  • Security
Offices
  • Calgary
  • Edmonton
  • Montréal
  • Ottawa
  • Toronto
  • Vancouver
  • New York
Connect
  • Insights
  • News
  • Events
  • Careers
  • Students
  • Alumni
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
© Bennett Jones LLP 2025. All rights reserved.
  • Privacy Policy
  • Disclaimer
  • Terms of Use
Logo Bennett Jones