Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Milwaukee Community Journal entitled “4 Factors To Consider Before Buying An Essential Business In COVID Times” discusses a rising interest among buyers in essential businesses. The COVID-19 pandemic has many buyers rethinking what type of business they might want to own, often turning to those deemed essential such as grocery, delivery, cleaning and home services.
When looking into buying an essential business, consider the following suggestions:
- Focus on successful types of essential businesses, those that are more likely to succeed even when economic conditions are poor
- Consider franchise opportunities which offer training and support
- Be able to decipher between a bargain and a bad investment
- Make sure that owning a business is right for you and that you are right for the business
A recent article from Forbes entitled “Deal Terms To Reduce The Risk When Buying A Business Now” explores the current state of the market and what it means for those looking to buy a business.
The market is presently filled with unknowns, both short term and long term. It is important to realize, however, that the stock market shouldn’t be treated as a barometer for main street small businesses. The buyer must evaluate each individual opportunity based on its unique circumstances and how those circumstances relate to the larger economic environment.
When evaluating a distressed business, it is important to consider how distressed the business is and what capital it will need from you as the new owner to weather the storm.
When evaluating a business that has remained strong, the reality is that multiples (and selling price) will likely remain steady. However, funding is limited with SBA resources tied up in stimulus lending. This leaves two likely ways to finance a deal – all cash (at a possibly reduced price) or seller financing. Buyers should also consider including earnouts in the deal to help protect themselves.
A recent blog post from Viking Mergers & Acquisitions entitled “3 Reasons Entrepreneurs Want to Sell Their Business” identifies three major reasons why business owners decide to sell.
These three reasons include:
- Burnout – The workload that comes with owning a business can be overwhelming, and many owners just put more into the business when they feel the demands growing, often leading to burnout.
- Desire to do something different – Eventually a business owner may become bored with the business and put less effort in, leading to burnout as they try to manage the business while feeling detached.
- Retirement – Many business owners put years into developing and growing a successful business, and selling that business is their retirement plan.