Although the title to this month’s article may seem contradictory, I believe that the title is accurate. On the sell side of the equation, we have several factors:
It is a Seller’s Market as there are fewer business available to purchase. Many businesses did not survive the COVID-19 shutdowns, and even more were financially wounded and will not go to market until they are healed. There are more confident, financially qualified buyers than businesses and the factors of supply and demand come into play.
Money is cheap and available, which permits buyers to pay more and acquire larger businesses due to lower monthly payments and better leverage. On the buy side of the equation there are also several factors:
It appears that the economy will be expanding as the vaccines are delivered and the stimulus payments circulate through the economy.
Competition has been thinned out as the weaker businesses have either closed or consolidated operations.
In addition to close to historically low interest rates, the second round of stimulus incentives can reduce borrowing costs on a $5,000,000 SBA funded transaction by about $200,000. This program starts on February 1,2021 and expires on September 30, 2021. The link below to our January 2021 eNewsletter goes into greater detail on these incentives.
As you can determine, the combination of the above factors makes this a “Win-Win” scenario for both Sellers and Buyers. This week I had a conversation with one the veteran SBA lenders that I have worked with over the years and he commented that “this is probably the best business transfer environment that we will experience for years.”
If you have been a subscriber to this eNewsletter for a while you know that we typically feature a few of our client businesses for sale. This month we are also featuring a motivated, knowledgeable, and well-funded buyer who has retained our firm to find the right business for him to acquire. In addition to his other attributes, and as an incentive to see more viable transactions, he has agreed to pay my firm’s fees in the transaction. If you or one of your clients have a business meeting his criteria, please contact us as soon as practical because we are actively contacting other business owners.
Due to our activity, we are still looking to hire another Broker/Dealmaker to operate out of our Colorado Springs office. If you are aware of potential candidates, please have then contact me. A description of qualifications is included in the link below.
The majority of our business comes from referrals, and we look forward to working with you.