There are often many questions about whether it “is a good time to sell.”
The timing of when a company should be sold is a very complex decision that can depend on many things, not the least of which is the company’s performance and macro issues in its industry or the economy.
However, a quick gauge as to how robust the markets are for M&A transactions is to look at the general availability of credit.
Absent company and industry specific factors, credit availability correlates directly with transaction multiples. This means when credit is available, transaction multiples tend to increase and vice versa.
The reason is that buyers are limited in the amount of their own capital to put into a deal because they usually have minimum return requirements for their capital. Their ability to invest beyond that is constrained by their ability to borrow.
Simple rule – transaction multiples increase when credit is easy to come by and banks are lending.