In spite of the precipitous decline of M&A transactions in early 2020, we saw an unprecedented bounce back during the second half of the year. “M&A activity remains strong despite COVID, with deal counts nearly the same as last year at this time,” according to the AM&AA Q1 2021 M&A Market Report – National and Regional Data.
And 54% of business brokers surveyed as part of the most recent BizBuySell's Insight Report expect the business-for-sale market to return to pre-pandemic levels within a year. “A resounding 87% of business brokers expect more owners to sell their businesses in 2021, with 35% expecting significantly more.”
“The stage is set for an acquisition spree,” claims the M&A monitor Q4 2020: outlook for the year ahead report from Freshfields Bruckhaus Deringer.
If the forecasts for the coming year are correct, we will see a continuation of the M&A rebound we saw in the second half of 2020 – great news for any business owner who is thinking about selling their business in the coming year! It also means that owners who have been putting off their exit planning need to start now to take advantage of market conditions.
According to BizBuySell's Insight Report, which tracks and analyzes small business-for-sale transactions and the sentiment of business owners, buyers and brokers,
The most recent AM&AA survey indicates that sellers continue to be most motivated by personal factors such as age/retirement, health/family, and personal financial considerations. It also highlights a number of changes and challenges to the deal process that M&A professionals are having to deal with such as:
Economic recovery from the pandemic is uneven but improving. BizBuySell’s survey shows that 52% of small businesses are still experiencing reduced demand, while 25% say they are unaffected by the pandemic, and 23% report an increase in customers. The more fortunate owners have been able to command higher prices for their businesses as evidenced by the numbers above. If you hope to be among them and capitalize on this trend, it’s time to get your business in shape.
There are numerous indications that there will be more sellers entering the market this year. One broker cites three reasons for this: “Baby boomers are aging out; COVID fatigue and uncertainty; a new administration that has signaled higher taxes are on the way. This could provide a lot of incentive for owners to sell.” More sellers in the market also translates to increased competition for buyers’ attention in the months to come.
If we’ve learned anything from this last year, it’s that there are always external factors, beyond our control, that can impact our businesses and the timing of our exit. However, if you’re prepared to cash out of your business when the market fully returns, you will be able to position your business for a successful exit – whether to external or internal buyers. Get educated on all the things you should do in advance of your exit as you seek to preserve the continuity of your company, maximize business value, and achieve your exit goals.
Ensure that your exit is successful by planning in advance! It is worth the effort.
Take the next step to ensure your future and the future of your business. Join our Expert Mastermind Group, which is launching soon and let us help you develop your plan.
You will learn from your peers and our work with more than one hundred business owners through three live 90-minute monthly calls that will include:
Don’t let another year go by without a plan!