For the last two months, most business owners have been feeling the pain of either reduced sales or their business being closed entirely. At the same time, they’ve had to pay their bills and figure out what to do with their staff. Prior to Covid-19, many business owners, perhaps including you, were thinking of selling their business. Covid-19 presents new business challenges related to reopening with social distancing measures in place, which may increase expenses and reduce income. These business challenges, which will last a few years, may be having you think even more of selling. So, you may be wondering, how can I sell my business now, and who would want to buy it?
There are still many buyers looking for good businesses to purchase. Savvy buyers understand this is a temporary situation and are looking for opportunities to purchase businesses with good future potential. The key is finding the right buyer for your business at terms that will work for both parties.
Here are some other reasons buyers are buying now:
- Because of layoffs and restructuring at large companies, there are more buyers out there. We saw this phenomenon during the 2008 recession where many executives decided to pivot after being laid off and instead chose to purchase a business. The government made it advantageous for them to use retirement funds for down payments, and these programs are still in place. We are being approached by many buyers looking to make a purchase soon.
- The SBA is offering favorable terms to buyers. For any deals closed by September 27, 2020, the SBA will make 6 months of the buyer’s loan payments. Additionally, interest rates are extremely low right now, with most lenders offering rates between 5-6% and down payments as low as 10%. This helps to increase the pool of buyers who can afford to purchase a business.
- Strategic buyers, including private equity groups, are very much looking to do acquisitions. They see the long-play in regards to adding strategic businesses to their portfolio and many have dedicated funds they must use to make purchases now.
If you have been thinking about selling your business, you should speak with a Broker for advice on whether it is the right time for you, based on your unique situation. Baystate Business Brokers values our clients during this important process, and we will only market your business now if we feel the timing is right to do so. We can provide valuation and consulting services to help you make the right decision for your future.