Seizing Opportunities: Why Now is an Opportune Time to Acquire a Privately Owned Business

Introduction

The business landscape has undergone profound transformations in the wake of the COVID-19 pandemic. While the global crisis brought challenges, it has also created unique opportunities for those looking to acquire privately owned businesses. In this article, we will explore why the current post-COVID environment presents an advantageous time to consider purchasing a privately owned business.

Market Resilience and Recovery:

One of the silver linings of the post-COVID era is the resilience and recovery observed in many markets. Businesses that weathered the storm and adapted to new realities are likely to be more robust, presenting buyers with the prospect of acquiring businesses that have demonstrated resilience and adaptability.

Motivated Sellers:

The economic uncertainties brought about by the pandemic have motivated some business owners to reevaluate their long-term plans. This has led to a higher number of businesses being put up for sale, providing buyers with a broader selection and potentially more favorable negotiation terms.

The Great Wealth Transfer:

This has become a hot topic in recent months.  The "Great Wealth Transfer" refers to the anticipated transfer of substantial wealth from one generation to the next, particularly from baby boomers to their heirs. The term gained prominence as demographics show that a significant portion of the US population is reaching an age where they are likely to pass on their accumulated assets to their children and grandchildren.

When discussing privately owned businesses, I can tell you first-hand, that we are seeing this on a daily basis.  Many boomers have built businesses over the past 30-50 years and were forced to delay the sale of their businesses due to the pandemic.  Whether revenue was higher or lower than pre-pandemic, these sellers needed to show a track record of post-pandemic success to potential buyers.  In 2024, many of these businesses have fully-recovered and the sellers are more-motivated than ever to begin retirement.

Valuable Lessons Learned:

The challenges posed by the pandemic forced businesses to innovate, streamline operations, and become more adaptable. Acquiring a business that has successfully navigated these challenges means inheriting valuable lessons and a foundation for continued growth.

Favorable Financing Conditions:

Central banks, financial institutions and the SBA have responded to the economic impacts of the pandemic by offering lending incentives and providing various financing options. This creates a favorable environment for buyers looking to secure financing for business acquisitions.

Many buyers have access to other funding options:

HELOC(s) - Nationwide, home prices are at nearly all-time highs.  Home owners may tap into home equity lines of credit to fund a purchase.

ROBS - ROBS stands for "Rollover for Business Startups," and it refers to a financing strategy that allows entrepreneurs to use their retirement funds to start or acquire a business without incurring early withdrawal penalties or tax liabilities. ROBS involves rolling over funds from an individual's existing retirement account, such as a 401(k) or Individual Retirement Account (IRA), into a new retirement plan created for the business.

Seller Financing - Seller financing is a financing arrangement in which the seller of a business provides financing to the buyer. In a seller financing agreement, the buyer makes payments directly to the seller over time, rather than obtaining a traditional mortgage or loan from a third-party lender, such as a bank.  Most seller financed deals will require a buyer to put at least 50-60% of the asking price as a down payment with a personal guarantee to secure the note, and/or pledging the business and assets as security.

Shifts in Consumer Behavior:

The pandemic has accelerated shifts in consumer behavior, with a greater emphasis on e-commerce, digital services, and health-related products. Acquiring a business that aligns with these evolving trends can position buyers to capitalize on changing market demands.

Talent Availability:

The economic shifts during and post-COVID have led to changes in the labor market. Acquiring a business now may provide access to a pool of skilled talent seeking new opportunities due to changes in their previous employment circumstances.

Reduced Competition:

The uncertainties brought by the pandemic have made some potential buyers more cautious, leading to a reduction in competition for business acquisitions. This decreased competition may provide buyers with more negotiation power and a better chance to secure favorable deals.

Strategic Opportunities for Growth:

The disruptions caused by the pandemic have created strategic opportunities for growth through acquisitions. Buyers can identify businesses that complement their existing operations, allowing for synergies and enhanced competitiveness in the market.

Conclusion

While the COVID-19 pandemic brought unprecedented challenges to the business world, the current post-COVID environment offers a unique set of opportunities for those considering acquiring privately owned businesses. Market resilience, motivated sellers, favorable financing conditions, and shifts in consumer behavior create a landscape rich with possibilities for strategic and profitable acquisitions. As with any business decision, thorough due diligence and careful consideration of market dynamics are crucial, but for savvy entrepreneurs, now may be an opportune time to seize the advantages presented in the post-COVID business landscape.

If you are considering buying a business, contact me today.

Melvin L. Vaz

Vested Business Brokers, Ltd.

631-909-1095 Direct

631-767-0157 Cell

877-735-7505 Fax

melvaz@vestedbb.com