By; Gary Rayberg, President ROI Corporation. www.roimergers.com
20 plus years of selling businesses and real estate ranging from 1-10 million dollars in value, through two recessions and across states such as MA, NH and RI (39 states in total) has taught me invaluable lessons such as TIMING. Is this the right time? My answer is “It just might be!”
Only 11% of small businesses have not been affected by the pandemic in the US. In fact, many businesses are doing better. I had a conversation recently with a retailer of Spas (think Hot Tubs). May 2020 was the best month in the history of the company and the staff was selling from home! So, the news is certainly not all bad.
This is true for businesses such as HVAC, plumbing service companies, many manufacturers, auto body shops, any office services provider that make it easier to work from home, online education providers etc. Add to this list, stay-at-home or vacation-at-home businesses such as the Spa retailer mentioned above. Or, the marina we have listed for sale where we are getting multiple offers. So, in short, if you have a business that is relatively unaffected, or whose sales are increasing, it’s ALWAYS good time to sell your business and it is still a seller’s market.
What if your business is being hurt by the current situation?
While Restaurants and those that supply them will most likely need a longer time to recover, many other businesses will still be in demand. Let’s look at some numbers…
According to Barlow Research Associates, the average small business owner in the US is 60 years old. 40% of business owners are 65 plus. This means an owner has to decide if they want to put the years that may be required into rebuilding through this recession or… sell at a reasonable price today.
It is true that according to the Q1 Market Pulse Report Published by The International Business Brokers Association, M&A Source (the leading trade organizations for M&A Business Intermediaries), 81% of business intermediaries surveyed felt that values will contract some. Typically, in my experience, these values will still be within a 10% range.
While waiting and rebuilding might yield a greater value in the future, the question to ask is, “do I actually want to do this for another economic cycle, or is this the time to move on with my life?” The answer is a deeply personal one, of course. The good news is that if the time is right to sell, there are still plenty of well-funded buyers and buying groups to compete for your business! Remember the process often takes up to a year and you may be asked to stay on for a period of 3 months to 5 years after a sale, so factor that into your retirement timeline.
An opinion of value is like the “you are here” mark on a map. It is hard to know what direction to move in until you know where you are. An opinion of value will tell you that about your business today.
If you want to understand the value of your business and what effect the current situation has had on it, contact ROI Corporation or another business intermediary for an opinion of value and other recommendations.
About ROI Corporation
ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI, ME and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. For more information, please visit us on the web at www.roimergers.com or call (781) 682-6209.