Not all markets are created equal. In Colorado we are fortunate that we reside in a state with a dynamic economy and a high quality of life. Consequently, for better or worse, we have significant in-migration which is helping to fuel strong job and housing markets. To a certain extent, this is a variation of the old “did the chicken or the egg come first” question. Are companies relocating and expanding in Colorado because of a growing workforce or are people relocating to Colorado because of the strong job market?
In any event, the labor market is a significant factor of influence and the business transfer market is robust in Colorado. For example, one of our featured clients this month is a landscape business. It is an established business with an affluent client base. The owners have decided to sell the business and retire. Actually, I had discussions with them last year, but the economy was negatively impacted by the pandemic. Although the subject business was an “essential” business and continued to service its customers, a significant part of its labor force during the busy summer months included documented employees with H2B visas. That program was substantially reduced to address pandemic concerns and there was a shortage of trained labor to meet the demand of the customer base. This resulted in reduced sales and profits. The H2B visa program has been modified, the trained labor is back in place, and the business is enjoying increased sales and profits in 2021.
Our landscaping client is a great example of supply and demand at work. On a more macro basis, we are seeing those same supply and demand dynamics at work in the Colorado M&A market. Simply put, there is an abundance of buyers interested in investing in a Colorado business, due to the belief that the economy will continue to recover, particularly in Colorado. On the supply side, there are fewer businesses on the market because certain industries that were negatively impacted by the pandemic and the businesses that were “wounded” are not on the market. Factor in the abundance of low-cost capital with SBA lending incentives, and the result is the Sellers’ market that our sell side clients are currently experiencing. For example, one of the businesses that we sold in April was under contract before going to market.
If you or one of your clients own a business and are thinking about a sale within the next three years, you should consider exploring your options. Our initial consultations are without cost or obligations, contact us.
In order to better serve our clients and customers in this robust business transfer market, The FBB Group, Ltd. Is pleased to welcome Chelsey Cerrillo as the newest member of our team. Chelsey has deep roots in Colorado and brings an outstanding skill set to our industry. You can learn more about Chelsey by reading her bio here.
The majority of our business comes from referrals, and we look forward to working with you.
Ronald V. Chernak
Inspiring business relationships since 1982!