There seems to be an optimism within the Mergers & Acquisitions industry now that we have a vaccine for COVID and the journey to returning to normalcy has begun. I’ve noticed this with the transactions I’ve been advising. The players are ready to get serious.
If you are a buyer, either an individual ready to own and operate a business or a company interested in growing your business with a strategic acquisition, you need to come off the sidelines now. All indications are M&A activity will pick up quickly and you don’t want to be left behind.
Here are reasons why this is the time to buy a business:
- BOOMERS ARE READY
The glut of Boomers is tired. COVID was the last straw. They realize holding onto their business as they age has become just too stressful. They want out. There is a vast inventory of good businesses to select from with motivated sellers.
- BUYER COMPETITION WILL INCREASE
Even though there are plenty of businesses to consider as acquisition targets, there also will be plenty of buyers with deep pockets competing with you. The buyers that were casually looking for a deal during COVID are now turning up their search. You may find yourself getting outbid by this large pool of buyers if you wait too long.
- LOW INTEREST RATES
Interest rates are historically low. This is a perfect time to finance a business acquisition while keeping your debt service low.
- PENT UP ENERGY
Let’s face it, everyone is tired of COVID and ready to get out and do things that cost money. This is good for small business and good for small business owners. It is a perfect time to own a business.
- BETTER POOL OF EMPLOYEES AVAILABLE
Unemployment rose during COVID. Many good workers have been unemployed and unable to find work. Finding star employees has always been a top challenge for business owners. If you buy a business now, filling open positions just became easier.
As buyers search for a business post-COVID they need to have strong financials. Financial institutions will demand this. Banks will want to make sure you, as the buyer, have analyzed the business thoroughly and understand how the business was affected by COVID. Did the business pivot? How did they survive the pandemic? Will additional working capital be needed as business returns to normal conditions?
As you start the process to buy a business, more than likely owned by a Boomer, you will be pleasantly surprised to find that many sellers are interested in staying on during transition time to make sure you are successful. They also want something to do without the stress of owning the business!
So, come off the sidelines. The time to buy a business has never been better!
This article was written by Sam Thompson. Sam is the president and owner of Transitions In Business, a Minnesota based M&A firm that specializes in selling healthcare, business to business, transportation, manufacturing, distribution and IT companies. Sam is a Merger and Acquisition Master Intermediary (M&AMI) and a Certified Business Intermediary who has successfully guided countless business owners through the sale or merger of their company. Prior to becoming an intermediary, Sam was a successful CEO and business owner for 29 years before selling his $16 million business.