Should I sell my business during the coronavirus pandemic?
Gauging the interest of prospective business buyers and sellers during the coronavirus pandemic, the business transfer market experienced and continues to experience demand which is slowly aligning to pre-Covid-19 levels. As the coronavirus lockdown eases and the business transfer market closely returns to normality, the appetite for business acquisitions and sales shows no sign of diminishing.
It is evident that due to challenging trading conditions deriving from the pandemic, the associated business transfer risk remains at unchartered levels, however, eager buyers retain their position at the forefront, continuing their search for a new business venture. As the economy undergoes slow recovery, lenders are tightening lending criteria and nervous buyers are taking cover, leaving the market exposed to proceedable buyers, making it a haven for sellers committed to conducting a quick sale.
Converting savings pots into tangible investments
We have experienced a noticeable increase in acquisition interest as prospective buyers sitting on pots of retained cash look to secure investments as industry competition reduces in comparison to previous years. As this cuts down the likelihood of stepping into a bidding war with other interested parties, prospective buyers are intent on converting their savings into valuable assets by buying a business. Following the uncertainty surrounding Brexit and the coronavirus pandemic, buyers have been biding their time to strike when business owners are more likely to negotiate lower prices to achieve faster returns and a speedier exit.
As the spread of the virus shows no signs of easing, prospective buyers are hot on their heels to secure competitive deals which would otherwise be snatched by higher bidding parties. Businesses are adapting to changing public health guidance by the day which is likely to influence market and asset value. If the pandemic is affecting your business valuation adversely, draining cash reserves and jeopardising prospects, selling shop fast may be high on your agenda. If your business is weathering the Covid-19 storm and showing resilience, this may function as a powerful and unique selling point, differentiating you from similar businesses.
Preparing your business for sale during Covid-19
As buyers with the necessary funds, financial backing and purchase appetite scout the marketplace for a suitable acquisition, uncertainty around business performance due to Covid-19 can be mitigated. By granting buyers transparency during the due diligence stage, you can edge them closer into agreement. The pandemic has hurled multiple curveballs to businesses in every sector, by illustrating how you have defended your business from such attacks and protected the financial of the business, you can provide the reassurances needed to earn the sale a green light.
As the vendor, carrying out an assessment on how Covid-19 has impacted your supply chain, customer base and employees can assist in showcasing your risk management strategy to buyers. By illustrating how you have cushioned your business from absorbing the financial blow, such as the renegotiation of contracts, performing financial cutbacks and requesting guarantees from your supply chain, you can tackle buyer nervousness and increase their appetite to buy.
Selling shop due to owner retirement
As working life faces a significant shake-up following public health guidance to work from home where reasonably possible to limit the spread of the virus, the pace of life has slowed down, carving out corporate work culture from the lives of employees. Workers in the tender position of approaching retirement, entrepreneurial minds looking to set-up shop and non-traditional workers searching for alternative working, may have used this time to recollect and move onto their next milestone. From setting up shop or exiting from the role of business owner, prospective buyers and sellers are in a good position to strike at this opportunity.
As both parties adjust to a marketplace which continues to recover from the initial dip in consumer demand following the coronavirus pandemic peak, we are witnessing the release of vent-up interest, as with the housing market, which shows a strong appetite from both parties. Our database of actively searching buyers continues to grow amid the pandemic and sellers are finding ways to overcome trading pressure, resulting in the rebirth of tougher businesses with stronger infrastructures.
If you are interested in selling your business during the coronavirus pandemic or in preparation for life after Covid-19, contact the Selling My Business team to discuss how to prepare your business for sale. Our in-house valuation team can conduct a free company valuation of your business to determine the financial value, assisting you in establishing an asking price.