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Q4 BizBuySell Insight Report

Acquisitions Drop 22% in 2020, Thriving Businesses Sell at Record Prices as Pandemic Reshapes Economy The number of small businesses reported sold in 2020 dropped 22% compared to 2019. This was the largest year-over-year drop since 2009 at the start of the Great Recession when transactions dropped 28%. A total of 7,612 businesses were reported as acquired in 2020, compared to 9,746 in 2019. Conversely, the median sale price rose 12% to $279,950, with revenue and cash flow reaching record highs, according to BizBuySell's Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment of business owners, buyers and brokers. While transactions slowed, the median cash flow of sold businesses grew 10.7% over 2019 to $135,567, while revenue increased 8.2% to $613,341. The impressive financials speak to the quality of businesses changing hands – specifically, the spiking demand for pandemic resistant businesses, while weaker deals remained … [Read more...]

Insights from BizBuySell’s 3rd Quarter Insight Report

Most business buyers and sellers are wondering what 2021 and beyond will bring.  BizBuySell and BizQuest President Bob House provided a range of insights stemming from BizBuySell’s 3rd Quarter Insight Report and a survey of over 2,300 business owners.  The simple fact is that the pandemic has most definitely had a major impact on the buying and selling of businesses.  This fact is obvious.  But diving deeper, there are a range of insights that can be gleaned.  First, owners do understand that COVID is a massive force in business right now.  According to the survey, 68% of owners feel that they would have received a better price for their business in 2019 than in 2020.  Only 37% of respondents felt that they would receive a better price this year.  Of owners who felt that they would receive a lower price in 2020 than in 2019, 71% of these owners said that their assessment was directly tied to the pandemic and its accompanying economic impact. A question on the survey asked owners if the … [Read more...]

What Makes a Deal Close?

For every reason that a pending sale of a business collapses, there is a positive reason why the sale closed successfully.  What does it take for the sale of a business to close successfully?  Certainly there are reasons that a sale might not close that are beyond anyone’s control.  A fire, for example, the death of a principal, or a natural disaster such as a hurricane or tornado.  There might be an environmental problem that the seller was unaware of when he or she decided to sell.  Aside from these unplanned catastrophic events, deals abort because of the people involved.  Here are a few examples of how a sale closes successfully. The Buyer and Seller Are in Agreement From the Beginning In too many cases, the buyer and seller really weren’t in agreement, or didn’t understand the terms of the sale.  If an offer to purchase is too vague, or has too many loose ends, the sale can unravel somewhere along the line.  However, if prior to the offer to purchase the loose ends are taken care … [Read more...]

Buying a Distressed Business 

It is safe to state that Howard Brownstein, President of The Brownstein Corporation, is a true expert in providing turnaround management and advisory services to companies, as well as their stakeholders.  Brownstein serves as an independent corporate board member for both publicly held as well as privately-owned companies and nonprofits.  During his career, he has been named a Board Leadership Fellow by the National Association of Corporate Directors (NACD) and served as Board Chair and President of its Philadelphia Chapter.  He also serves as Vice Chair of the ABA Corporate Governance Committee and has been named a Fellow of the American Bar Foundation.  He has been a speaker at many of the world’s top universities including Harvard Business School and Wharton.  Brownstein received his J.D. and M.B.A. degrees from the University of Pennsylvania. Mr. Brownstein is considered to be one of the world’s top experts in distressed businesses.  He believes it is essential to remember that … [Read more...]

Considering Generational Strategies

When you are buying or selling a business, you might very well end up making a deal with someone from another generation.  Therefore, it only makes sense to take the time to understand that individual’s background and how that might cause behavioral differences.  It is important to understand and reflect upon where many of them are coming from and the collective experiences and trends that shaped their identities and perspectives.  At the same time, you can identify your own biases, strengths and weaknesses that may be caused by your own upbringing. The strategies in this article originated from Chuck Underwood who is considered a leading expert in the diversity of communication styles between generations.  He is the author of a major book on the subject as well as host of the long-running “America’s Generations with Chuck Underwood” on PBS.  Generational Sensitivity  Underwood’s perspective is that people of each generation … [Read more...]

Essential Meeting Tips for Buyers & Sellers

The buyer-seller meeting is quite often a “make or break” meeting.  Your business broker or M&A Advisor will do everything possible to ensure that this meeting goes as well as possible.  It is vitally important to realize that rarely is there an offer before buyers and sellers actually meet.  The all-important offer usually comes directly after this all-important meeting.  As a result, you want to ensure that meetings are as positive and productive as possible. Buyers need to understand how the process of selling a business works and what is expected of them from the process.  Buyers also need to understand that following their broker’s advice will increase the chances of a successful outcome.  Sellers should be ready to be honest and forthcoming during the meeting.  They also want to be sure to not say or do anything that could come across as a strong-armed sales tactic.  Asking the Right Questions If you are a buyer … [Read more...]

Negotiating the Price Gap Between Buyers and Sellers

Sellers generally desire all-cash transactions; however, oftentimes partial seller financing is necessary in typical middle market company transactions.  Furthermore, sellers who demand all-cash deals typically receive a lower purchase price than they would have if the deal were structured differently. Although buyers may be able to pay all-cash at closing, they often want to structure a deal where the seller has left some portion of the price on the table, either in the form of a note or an earnout.  Deferring some of the owner’s remuneration from the transaction will provide leverage in the event that the owner has misrepresented the business.  An earnout is a mechanism to provide payment based on future performance.  Acquirers like to suggest that, if the business is as it is represented, there should be no problem with this type of payout.  The owner’s retort is that he or she knows the business is sound under his or her management but does not … [Read more...]

6 Tips and 90 Days to Protect Your Business

There can be no way around it, Inc. contributor Brian Hamilton’s April 2020 COVID-19 centered article, “6 Actions to Take in the Next 90 Days to Save Your Business,” isn’t pulling any punches.  Hamilton, Founder of the Brian Hamilton Foundation, believes that the next 90-days could be make or break days for business owners looking to navigate the choppy waters of the COVID-19 pandemic.  His latest Inc. article provides readers with 6 actions they should take now to survive the economic fallout of the COVID-19 pandemic.  Tip #1 Vigorously Control What You Can Hamilton’s first tip is to “Vigorously control what you can.  Vigorously ignore what you can’t control.”  As Hamilton points out, you can’t control the economy; instead, you need to focus on what you can control.  His view is that there has never been a more important time to focus, “More than ever, you’ll need to go to war with things … [Read more...]

Improving Your Telework Habits

In her recent April 20th, 2020 Forbes article, “Three Keys to Engaged, Productive Telework Teams,” author Rajshree Agarwal, who is a professor of Strategy and Entrepreneurship, explored how to get the most out of telework.  This highly timely article covers some very important territory for many companies dealing with the COVID-19 pandemic.  Let’s explore Agarwal’s key points so that you can help your team get the most out of telework. Agarwal notes that people may tend to shy away from sharing personal information and feelings while in the office.  But via video conferencing, the story can be different.  For this and other reasons, it is necessary for employers to keep in mind that the dynamic between you and your employees may be different when you use video conferencing.  This will also often be the case when your employees speak with one another.  She prudently cautions business owners from taking a … [Read more...]

Don’t Fear Failure, Learn from It Instead

Failure is rarely fun.  But it is also a key ingredient in success.  While failure can be painful, there is no doubting the fact that the lessons that come from failure can be powerful teachers that provide life-long lessons and even life-trajectory altering results.  Summed up another way, failure hurts.  But on occasion, not failing could hurt more, especially in the long run. In her Inc. article, “Why Tons of Failure Is the Key to Success, According to Seth Godin,” author Sonia Thompson, CEO of Thompson Media Group, points out that most people “avoid failure like the plague.”  Instead, they spend their time trying to achieve perfection.  In the process of adopting this approach, people miss all kinds of opportunities because they are afraid of damaging their egos.  Embracing failure is a way to experience many “transformational benefits,” which would never be experienced without the lessons of failure. Thompson … [Read more...]