25 Nov A Deeper Look at the Pandemic’s Impact on Business Buyers and Sellers
In our previous article covering Bob House’s Business Brokerage Press webinar, we covered BizBuySell’s 3rd Quarter Insight Report as well as their survey of over 2,300 business owners. The webinar can be accessed here. In this article, we’ll do a deeper dive into the numbers and learn more about how buyers and sellers have approached the wild year that is 2020.
A Surge of Buyers
One of House’s key points is that, while business may be in a turbulent state, there is no denying the fact that there is keen interest in buying businesses. House notes that BizBuySell and BizQuest have seen their numbers bouncing back with great intensity.
Much of this interest is from new buyers who are entering the market. Many of these new buyers have lost jobs, often due to the pandemic downturn. Currently, they are looking for unique opportunities that have resulted from the downturn. House mentions that pointing out this fact to apprehensive business owners may encourage them to step off the sidelines and get into the game. In general, House notes that BizBuySell and BizQuest are currently seeing more listings come onto the market.
Excellent Results for Stronger Businesses
It will come as no surprise that fewer businesses are being sold. House notes that Q3 dropped 16% year over year, but this is no real surprise. However, the numbers are improving. One of House’s insights in particular was quite telling. He stated, “It seems counterintuitive in some ways, but what’s happened is the better and stronger businesses are the ones that are making it across the goal line right now. And the weaker deals that would have been completed before the pandemic have been pulled back or are sitting on the sidelines and not selling. Again, stronger deals are making it across the goal line and that’s resulting in both higher asking and sales prices.” He pointed out that the median sale price was up 20% year over year, while the median asking price was up almost 18%.
An Increase in Asset Sales
Asset sales are also being increasingly popular. In the survey of 2,300 business owners, it was discovered that a whopping 47% of buyers said they were considering purchasing the assets of closed businesses. This numbers appears to be fueled by new buyers entering the market and existing business owners, who see the pandemic as a high-octane opportunity to acquire new assets and grow their business. As House stated, “Asset sales are going gangbusters right now because owners can’t sell based on the multiple, and sellers are just asking to get out of the equipment.”
