• Thu, May 07, 2020
  • Is now the right time to sell or buy a business? What about coronavirus?
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  • By Eric J. Gall, Edison Business Advisors

    Is now a good time to buy or sell a business?

    You might think the answer is ‘no’ as so many businesses have been closed or have been negatively affected by the Coronavirus.

    As bad as the present economic situation appears; numerous Zoom calls with other brokers and industry experts have confirmed buyers and sellers are still in the market and the future outlook remains optimistic.

    What have we seen?

    1. Many Americans have lost their jobs.  When job loss happens, many people wish to control their own destiny.  The easiest way to do so is to buy a business.  I am already fielding calls from buyers who have just been laid off and are flush with cash looking to buy as soon as possible.
    2. New buyer inquiries initially became far less frequent from mid-March to mid-April.  However, by the end of April buyer inquiries returned to near normal volume on solid, profitable, "essential" businesses.  The best part is the "tire-kickers," buyers who seem to spend a lot of time looking but never buying, haven't been heard from.  Nearly all inquiries are coming from serious, motivated buyers.
    3. Businesses generating over $125,000 in owner benefit, i.e., the size of business someone buys to replace a job or as an investment, are receiving the most looks.  Businesses that are considered "essential" are receiving offers.

    What do we expect moving forward?

    1. I expect more buyers will be looking to buy a business to buy a job or gain independence from an employer.
    2. Investors know there are always deals coming out of a downturn and they will be actively seeking out good investments.
    3. As businesses fail or struggle, the stronger business owners will look to expand via acquisitions.
    4. The next six months will likely be slower than normal; however, as we start seeing economic improvement by the end of this year the well-capitalized buyers will be highly active.  You will want your business on the market to capture this opportunity.
    5. If you are worried about selling while profits are down; understand, valuations are not likely to punish a seller too harshly for what is expected to be a one-time event. 
    6. If you have low fixed overhead relative to sales and a good forward-looking recovery plan, you are in a great position to sell.

    While times are "different" it is still a good time to buy or sell a business.  Crisis creates opportunities not otherwise seen in more steady times.  Whether you are a buyer or a potential seller, there is no better time than right now to speak to a broker about taking the next step.  Let's talk about your next move today!

    Eric J. Gall
    [email protected]