The good news for those considering selling is 2021 is shaping up to be a once in a generation opportunity to sell a business for top dollar and under highly favorable term. This is a result of the following elements coming together to create a proverbial “perfect storm”:
- It’s a Seller’s Market right now. There are simply too few quality businesses for sale to meet buyer demand.
- Business that sold in the 2nd half of 2020 were valued at higher multiples than at any other time in recent memory.
- Interest rates remain at historically low levels, fueling increased buying activity.
- The recently approved SBA COVID relief package provides an enormous incentive for buyers to purchase a business using SBA backed funding between 2/1/21 and 9/30/21. Loans funded in that time period with have their first 6 monthly payments forgiven (up to $9,000 per month) and the SBA Guaranty Fee waived. As an example, this translates to a savings of over $100,000 on a $2,000,000 loan.
- There is now optimism in the market that the worst of COVID’s impact on our economy and our country appear to be finally behind us. The positive momentum this created at the end of 2020 is carrying over in a big way into 2021.
It’s hard to imagine that only 6 months ago, much of our economy was in a lockdown. Even the best of businesses weren’t selling as buyers and banks took a “wait and see” approach. Thanks in part to a previous SBA COVID relief package that expired on 9/30/20 and a belief that the economy was finally on the rebound, Sunbelt witnessed record levels of transactions in the 3rd and 4th quarters in 2020. In fact, despite a 2nd quarter with virtually no activity, 2020 proved to be a record year for us in terms of the number of closings and total transaction dollars.
Taking all of these elements into account, I trust you can appreciate why I feel so strongly that 2021 will be a “perfect storm” for selling a business. Of course, all situations are unique and the desirability of your business in eyes of a buyer is partially dependent on how COVID impacted your business in 2020. The good news is that even if this impact was a negative one, as long as your business is back on track, meeting pre-COVID performance levels, the value of your business may not have been negatively impacted. If you would like to discuss how your 2020 performance impacted the value of your business or if you simply want to talk about the process and options you have when it does come time to sell, feel free to give me a call or send me a note so we can schedule a time to meet (either over the phone or in person). I hope to hear from you soon.
Best Wishes for a safe and prosperous 2021