11 May What Comes Next? The Pandemic’s Impact on Business Brokers
In uncertain times, everyone asks, “what comes next?” Business brokers and M&A Advisors are no doubt asking what will come next for their businesses, and their clients are wondering about the same thing. During our recent roundtable discussion, our panel of experts shared their thoughts on what they think the near-term future holds in store.
The panelists for this discussion included Bob McCormick, Managing Partner at Murphy McCormick Capital Advisors; Scott Bushkie, Founder and President of Cornerstone Business Services; John Howe, past chairman of the M&A Source and current chairman of the International Association of Business Intermediaries; and Sara Burden, President of Walden Businesses.
In terms of what sellers should expect, the answer seems pretty clear. As Sarah Burden pointed out, sellers should expect to see buyers do everything in their power to drive values down. Buyers will use the pandemic situation as a way to try and get an amazing deal.
Sellers, especially those hit the hardest by the virus, will obviously be quite concerned about losing value. Burden notes that it is up to brokers to advise and educate sellers on how best to proceed. Currently, there is ample uncertainty. In particular, we don’t know if the pandemic-driven economic downturn is a blip, a three-month phenomenon, or something longer and more serious. Values may hold. This is especially true for businesses that can showcase how they will bounce back quickly once life has regained some level of normalcy.
Bob McCormick added two key points. He noted that business brokers must manage seller expectations. Secondly, he emphasized that buyers are very active. In general, the panelists all agreed that it is simply too early to “freak out” about valuations.
The panel also addressed how the pandemic will specifically impact business brokers. Should business brokers expect an increase in the amount of business owners looking to sell or exit their companies? Scott Bushkie believes that over the next 30 to 60 days, there will be something of a pause as business owners may not want to get into a situation similar to 2009. However, he also noted that there are many potential sellers out there who have done very well over the last five years and are now looking to get on with their lives.
John Howell echoed this statement. He believes that many business owners may simply tell themselves, “now is the time to do something different.” The panelists seem to agree that there will be a great deal of activity moving forward.
Again, no one can accurately predict the future. We don’t yet know when the post-pandemic era will begin and what condition the economy will be in once business truly opens back up. With that stated, however, many of the governing forces are firmly entrenched. For example, there are still a large number of Baby Boomers that need to sell soon. This is just one of many potential contributing factors to the current climate.
When it comes to business brokers and M&A Advisors, it is essential to pay close attention to what is happening within the industry, think outside the box and clearly communicate what you can bring to the table for clients and how that will benefit them.