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Ringing the Register

By November 6, 2017Newsletters

I was contemplating the origin of the phrase “ringing the cash register” and asking myself, “why was a register designed to ring in the first place?” and found that James Ritty, a saloonkeeper from Dayton, Ohio, wanted to stop employees from pilfering his profits. He invented and then patented in 1879, “Ritty’s Incorruptible Cashier,” which “rang” every time there was a sale, alerting the owner of a transaction.

In speaking with company owners and entrepreneurs over the past few quarters, it appears that many of them, previously reluctant to sell, are considering “ringing the register” on the businesses they have spent years or decades building. We believe this trend will accelerate as we move into 2018 for the following reasons:

  • Many just met with their tax advisors to file extended tax returns and strategically look at 2018 as a bellwether year
  • Technology changes are upending all industries and many entrepreneurs are not confident that they can successfully ride the technology cycle to address the new customer and supply chain dynamics
  • Multiples are high with averages at or near double digits
  • Interest rates are likely to continue to rise in 2018, putting a lid on pricing
  • Tax changes, should they come, will likely involve lower capital gains rates in 2018
  • 2018 is an election year for Congress – who knows what will come of this?
  • Those in business for more than a decade still have vivid memories of 2007’s to 2008’s “hot to cold” environment

It remains suspect as to when the current “economic” cycle will unwind.  We are focusing our counsel to business owners here:

  • If you are not prepared to sell with current macroeconomic tail winds abound, what are you doing to prepare yourself and your business for the realities of the technology cycle you are currently in, the interest rate cycle that is evolving, and the downward macroeconomic shift that is to come?
  • Are you prepared and capable of leading the largely illiquid asset that is your business through these dynamics?

In closing, keep a sober head and avoid, unwittingly staying past midnight in Ye Olde Optimism Saloon – take a sip of Ritty’s finest whiskey, “neat” and ring the register!

For more information on CBIZ CMF’s Preparation for Sale Program, click here.

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