Don’t Panic: Business Buying and Selling During a Pandemic
Previously, we’ve given you some important information about what you can do get assistance for your business during this trying time in our country. As the crisis grows and lingers, dynamics necessarily change for both buyers and sellers in the marketplace. What we continue to tell our clients here at AEX is: don’t panic. Those who don’t panic, can focus and keep their heads when everyone is losing theirs will prosper when conditions improve. With that spirit of calm, let’s consider some things.
Short Term (the next 90 days)
We have deals in the pipeline and some of them will collapse due to a change for either buyer or seller that was unforeseen prior to these past few weeks. This has nothing specifically to do with the business but more to do with the general business climate. For example, a buyer may get cold feet about buying now or watched income which was going to be cashed out of stocks to finance the sale crater in value. They may see waiting as the best option.
That said, many deals will close, regardless. We saw some of this in 2008 during the financial crisis as well.
While the media may make it seem that fire is raining down from heaven, the reality is that business does go on in many sectors. And not just in the US but worldwide, including the supply chain for all businesses marked as “essential”. Indeed, some businesses are seeing their most profitable months in some years even as they move towards acquisition. Some of those sellers might delay a sale just to continue to ride some of those record profits a couple more months.
Medium Term (the next 6 to 18 months)
Should some kind of lockdown become national in the United States as it has in much smaller countries in Europe, there could be a hit to valuations of businesses, as those are based on earnings including the most recent financial statements.
On the other side, borrowing will be historically easy, as the Treasury and SBA make unprecedented guarantees and funds available. Rates are at historic lows. Some banks may put some additional provisions in the paperwork in relation to COVID-19 and its impact on certain types of businesses. But banks want businesses to move forward, not to freeze up, so they will likely be encouraging rather than discouraging.
Long Term (the next 24-48 months)
As with any shock to the economy of any country, there will be some necessary recovery time. But the realities of life go on.
The Baby Boomers continue to retire, and in record numbers, and many own businesses that have to be sold. Many people will begin to see their jobs through new lenses in a period of remote work. And the idea of buying a business, with its levels of control and opportunities for growth, may become even more appealing.
This isn’t to say that we don’t see some challenges ahead, but we tend to take the long view, because this isn’t the first economic shock we’ve experienced as advisors. Life does go on, despite great uncertainties, and indeed, this time, as any time in life and in business, is only as good as what you choose to do with it.
We look at facts and history and combine them with what we hear from our buyers and sellers and that leads us back to what we started this article with: not panicking.
Business opportunities during the coronavirus pandemic
With COVID-19 running rampant, the economy has taken a huge hit, and most of us are suffering. It’s just a tiny fraction of businesses and industries, mostly through sheer luck, who have thrived during this crisis. But are there real opportunities (ethical opportunities that actually help society, that is) to make money during this time?
To help answer that question, we put out the following request:
What new business opportunities are there during the coronavirus pandemic? Legitimate/ethical opportunities only (no hoarding hand sanitizer to try to make money). For example, with companies shifting to remote work, there may be an opportunity for business consultants to help advise companies on making a shift. Any and all ideas welcome, especially those with real examples.
The below is what I got back. To summarize, here are the best business ideas and/or exploding industries people are foreseeing during the COVID-19 pandemic. Of course, not all of these are things that just anyone can do, and many require specific training and education that you can’t just complete in a week or two. But you may find at least one thing here that piques your interest:
- Virtual reality tours (both for real estate, and vacation destinations)
- Cleaning and sanitation services as people place a greater emphasis on hygiene and cleanliness
- New tools for remote working
- Food delivery services
- Online educational courses (especially in the “health, nutrition, fitness or childcare realms”)
- Online tech support
- Psychological support
- Life insurance (according to one submission, and I can believe it, demand for life insurance increases after one experiences a major life change involving death or some kind of crisis)
- Drive-in movie theaters (as these offer much greater social distancing than ordinary movie theaters)
- Formulating your own alcohol and sanitizers, or creating your own face masks (DISCLAIMER: be careful with legal/liability issues – do your own research if you’re considering this)
- COVID-19 themed t-shirts
Do you have questions about buying or selling a business right now?
We’re happy to talk through some of the challenges (and opportunities) with you! Fill in the contact form and we will get back to you promptly.
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