The Evolving Market in ’21
I’m working with a local, South Florida business owner who is considering selling his business. He’s owned it for nearly twenty years, and it’s been a very profitable enterprise. Selling something he’s spent a lifetime building is an emotional decision for him, but he recognizes we have an opportunity to negotiate a lucrative exit. His business has proven to be one of the lucky “pandemic proof” businesses, remaining profitable during COVID. Therefore, he can potentially cash in on the Sellers’ Market that exists for the approximately 20% of small businesses that fall onto this category. According to a recent industry insight report, the median sale price for these businesses was up 12% in 2020.
Of course, most businesses were not pandemic resistant, and last year was historically challenging. According to the report, 18% of surveyed owners delayed selling their businesses due to a loss in customers and revenue. Hopefully, the months ahead will find more Americans getting vaccinated, the pandemic footprint decreasing, customers returning, and along with them, the value that may have been lost. If all those variables align, we can expect to find more business owners feeling comfortable enough to sell. I recommend business owners be able to show two consecutive quarters of growth before listing.
Another reason inventory could increase, according to the report, is political. The new presidential administration has signaled that higher taxes are on the way, which could provide small business owners all the incentive they need to sell.
54% of surveyed Business Brokers expect the business-for-sale market to return to pre-pandemic levels within a year, something owners should consider when evaluating their timelines. Whether your business is thriving or working to re-establish value, the best first move is to contact an expert. Call Robert Morrison and South Florida Business Brokers by Sunbelt at 754-300-8651.