Outlook for Buying & Selling A Business in 2021
Historically, it’s either a Seller’s or Buyer’s market. But COVID-19 changed the landscape and it is NOW A MARKET FOR BOTH, and here’s why: The SBA has always provided banks with a 75% guaranty on loans, but for RIGHT NOW SBA GURANTEES 90%! The government is trying to stimulate the economy by making access to funds easier for entrepreneurs.
For Sellers, this means a “qualified buyer” is more likely to get the funding to purchase your business. Millions of businesses have closed as a result of the pandemic and as a result we have unemployed and displaced individuals who are looking to purchase a business. Additionally, with the elimination of businesses, those who have prevailed are the diminished and remaining inventory for buyers to pursue. This can increase a Seller’s sale price (supply / demand dynamic) while also providing more comfort to a buyer and lender that the business is stable.
YES, you can still buy or sell a business in the midst of the pandemic! The “window of opportunity” for Sellers to exit with optimal price and terms may be limited, and here’s why: There is a pent up demand of buyers looking for a good business and temporarily they have easier access to funds. Due to aging (and other factors), there is an expected flood of “baby boomers” who will bring their business to market for a sale so they can exit. There is a limited supply of Gen-Xers to purchase those businesses when they do come to market. So the supply/demand dynamic will quickly shift and we’ll be back in a Buyer’s market with lower price and terms for Sellers.
The government has released TRILLIONS of dollars in bailouts, stimulus, and CARES ACT funds. Do you believe that TAXES ARE GOING TO INCREASE, remain the same, or possibly decrease to recapture the money that was spent? Do you believe the cost of doing business will increase, or that the tax rate on the sale of a business (asset) will increase or remain as it is? With all the elements in play (known and unknown) you should consider where you will be in the timing of the market: sailing through calm waters or trying later to navigate a stormy sea. Call us today at 918-438-8218 to confidentially discuss your options . . . you’ll be glad you did!