We have seen a significant uptick in recent weeks in activities, from buy and sell side. This is most strongly reflected by a significant increase in buyer inquiries.
However, the sell side, too, has shown more readiness and several business owners expressed their desire to sell. But whereas in the past, a considerable number of business owners was not in the “retirement age” but merely wanted to “take some money off the table”, we now see a trend towards sales where a business owners truly wants (or has) to retire. This spells good news for a buyer for a number of reasons:
First, a truly motivated seller is more helpful in the transfer process. This is very important as the emotional bond a seller has developed to the business over many years is expressed by way of his/her desire to see the business continue to truly grow. As opposed to a short-term investor attempting to “flip” a business.
Secondly, a “true seller” will be more consistent in the business transfer process. For example, whereas a “true seller” will stick to a deal and follow through, a seller less motivated might have “cold feet” and “second thoughts” in the last stretch of the business transfer and try to terminate the deal – at the expense of the buyers’s previous financial expenses and time efforts.
Finally, a motivated seller is more willing to accommodate a buyer. This can mean more flexibility in terms of the deal structure, the transfer process or simply a more modest asking price. And whereas almost always too much emphasis is attributed to a price by a buyer – rather than interest and capabilities to run a business – this factor can be important in ultimately closing a deal between both parties.
These trends combined with more freely available business acquisition loans and more lending interest by the banks, SBA or not, let us to believe that the deal flow will significantly increase among our 450 offices this year.
Courtesy of Achim Neumann, President A Neumann & Associates, LLC