“Is now really a good time to sell my business?” That’s the number one question I am getting from business owners at the moment. So, I thought that I’d address this topic publicly, just in case any other business owners are wondering the same thing.
The honest truth is, I don’t know. These are unprecedented times we are living in, and I don’t know what tomorrow will bring. I wish I knew where we will be economically in a few weeks or in a few months, but because we can’t see into the future, all we can do is keep moving forward, preparing for the worst, but planning and hoping for the best.
Do we have business owners listing their businesses for sale right now? Absolutely. Several just this week. Do we still have buyer inquiries coming in on the businesses we have listed for sale? Yes…as many, if not more than we normally do. Do we still have deals under contract that are still going through? Yes, we have a handful that are still on track to close.
So, if you think that now might be the right time to list your business for sale, you should carefully weigh the pros and cons of doing so at the moment. I’ve put together a list in each of the categories for you to consider.
- We are getting a good amount of buyer interest on our current listings, and at the moment, with mostly everyone home, considering their options, we have a relatively captive audience of potential buyers that we can market to.
- Now is the perfect time to do all of the prep work that is necessary to get your business listed for sale. While business is quiet, it’s a good opportunity for you to gather your financial and business documents and get them over to us for a valuation. Once your business is valued, if you want to hire us to sell your business, then we will process all of the listing paperwork. That’s when our marketing team will work on getting all of your advertising materials created and posted on all of the websites we use for advertising.
- Many business owners might be inclined to wait to sell their business until this current storm passes, but there will be many other business owners out there thinking the exact same thing. Even without a pandemic affecting our economy, unlike selling real estate, the process of selling a business is not usually a quick one. The average time that a business spends on the market is 282 days. For some reason that we can’t explain, we often see a spike of buyer action happening in many business listings after 6-9 months on the market. Some businesses can even take 1 to 2 years to sell. So, if you want to sell your business, you have to be patient, as it’s going to take some time. If you are motivated to sell your business, why not get it listed now, get ahead of the curve, and take advantage of a head start?
- The biggest challenge that we are seeing at the moment with our business sales is financing. While the SBA is encouraging lending and even offering special loans to businesses during this uncertain time, some of the individual banks that are actually lending the money have ceased taking on new applications for the time being. So, that is definitely a hurdle to overcome when trying to complete a business sale. The good news is that there are still banks lending, as well as alternative loan programs that are doing business right now. As lending is proving to be somewhat problematic with our current economic situation, the businesses that will be much more likely to sell are the ones who offer owner financing to qualified buyers. Sellers who believe in their business, and who are willing to back that up by financing part of the deal will be much more successful in selling.
- An obvious con is that the time it takes our economy to recover from this world-wide disaster is unknown. Will buyers want to take the plunge and buy a business in this economic downturn? Traditionally businesses sell best when they are at the top of their game, so businesses that are suffering right now might not be most attractive to buyers. However, with a few industries (like grocery stores, packing, shipping, and delivery businesses) excluded, MOST businesses are hurting right now, and it will be commonly known and accepted that this period of time is an anomaly in a business’s financial history, just like the times where we have gone through a hurricane, suffered from red tide, or there was an oil spill in the gulf. A savvy buyer will understand that. We just don’t know at this point when our economic circumstances will begin to improve.
- Another big con for business sales right now is the fact that all US Embassies worldwide are closed to the public. What makes that an issue is the fact that a large number of small business buyers in Florida are foreigners applying for an E2 Treaty Visa. Buying a business in the US will allow them to live and work in the states. We have several E2 buyers under contract right now, and their sales are all on hold. We’ve been told by immigration experts that it could be up to 3 months before the Embassies open again and begin to process Visa applications. These business sales can’t close until their Visas are approved, so it is a waiting game at this point. Going back to the third pro above, on average businesses take 282 days to sell, so waiting on Visa applications for the next 3 months will not affect a business that is newly coming onto the market right now.