Are There Any Benefits to Buying or Selling a Business Now?
I am a Florida-based Business Intermediary (also known as a Business Broker), and though the pandemic has certainly impacted the landscape for buying and selling businesses, all is not lost. Though there are definite disadvantages, there are also definite advantages. Three of these advantages are:
- Baby Boomers who were postponing retirement another 3-5 years are instead moving to market now
- More Sellers are becoming more reasonable with their asking price and/or flexible on their terms
- Distressed businesses driven by COVID-19 impacts create opportunities for the visionaries
What does this mean for Buyers? Though many Sellers, pre-COVID, were planning to stay in their businesses another 3-5 years, they are now looking to exit much sooner, and that trend is projected to continue at an increasing rate. Does it mean that many of these businesses are struggling or distressed? Not at all! What is does mean is that these Sellers are ready to retire and more than likely have businesses with strong goodwill and prime growth positioning—value adds for a prospective new Owner!
Additionally, more Sellers in general are becoming more reasonable in their perspectives of the value of their businesses, which is resulting in more realistic asking prices and more creative terms. This means that as a Buyer, you may find greater opportunities than before to leverage your acquisition capital by means of seller financing—lower down payments and possible higher returns on investment!
As for those distressed businesses, yes, a number of businesses are unfortunately struggling to keep the doors open. As a Buyer, that means there may be an opportunity for you to acquire a distressed business at a significant discount in the hopes of restoring the business to its full operating capacity and optimize its potential for future growth.
What does this mean for Sellers? Yes, it is possible that if you are to sell a business right now, you may not receive the asking price you were originally hoping to pre-pandemic. However, remember the following: a business is ultimately worth what a Buyer is willing to pay for it. You have to be realistic as a Seller if you want to exit a business, especially now. The good news is, though, Buyers are buying!
Buyers in the market now are more qualified, more serious, and more inclined to see a deal through to the finish. It’s up to you as the Seller to get just as serious and prepared to attract those Buyers. Offer some seller-financing as a part of the deal—many times, you obtain a deal closer to your original asking price if you have seller-financing available versus what you obtain in a cash deal.
If you can tough it out, perhaps your business may rebound in the coming 2-3 years, which means you may be able to sell then and obtain your ideal asking price. The reality is, though, no one knows when this pandemic will be over, nor does anyone know what the long-term, economic impacts will be. It is truly a roll of the dice on “the now” versus “the then.” If you have a willing and ready Buyer now, you may want to strongly consider an exit.
If you want to discuss some of the benefits of buying or selling a business in Florida, contact Terri D. Sherman, PA (Broker: Florida Business Exchange, Inc.) at 888.925.5055 x 207, and let me help you “mind your business today”!