If you have a profitable business in a growing industry, this might be a great time to sell. Photo: Adobe Stock
“Some people are right on top,” said Mike Bosma, senior manager at Keystone CPA and business broker at M&A Business Advisors in Reno. “Are you talking about Zoom’s fatigue?” There is corporate weariness. It seemed like at the start of the COVID shutdown, every decision you made seemed like an end to your life. And when you’re in it for so long, you’re just tired. “
As a result, the pace of retirements has accelerated considerably over the past year. According to data from the Pew Research Center, approximately 28.6 million baby boomers (born between 1946 and 1964) retired in the third quarter of 2020. That’s 3.2 million more than the 25.4 million. baby boomers who retired in the same quarter of 2019.
ALL ABOUT CASH FLOWS
“If you had some really terrible cash flow during COVID, you might want to consider hanging out for 2021 and getting a bump out of your bounce,” Guthrie said. “If you can show that your income and seller discretionary profits are back to 2019 levels, they can roughly rule out 2020 in the calculations. In the small business market, most people buy cash; they want to give you some money for a living.
“It’s not that much now, but in the midst of the pandemic you couldn’t give a bar,” Bosma said. “And depending on the type of restaurant, these values have dropped considerably. And some doctors’ offices will probably never get over it. If you were doing elective surgeries, in this season you were on the beach, there was nothing you could do.
Guthrie added, “Buyers are really looking for what they call COVID-proof businesses. But, in reality, it is the companies that have shown a certain resilience and a certain flexibility.
And for those business owners in a strong position to sell, one of the first things they should do, if they haven’t already, is request a P3 loan forgiveness, Guthrie said.
While not all Nevada businesses got one, more than 124,000 Silver State businesses received the $ 6.9 billion SBA-backed loan, according to FederalPay.org .
“Once it’s forgiven, it’s like it’s never been there,” Guthrie said. “If they can’t be forgiven, we recommend that they get it reimbursed as soon as possible. If they don’t, it’s a lien on their business, which can delay escrow, if they have a buyer. Or it could lead to a seizure of funds, either to repay the loan or to hold them while the remission is on hold.
“So if I have $ 100,000 (in P3) but I’m in the middle of the forgiveness process and it’s not forgiven yet, they’ll ask to withhold $ 100,000 from the sale. So you get your money more slowly.
NO SUDDEN MOVEMENT
For an entrepreneur keen to buy and grow an established business, one of the biggest mistakes he could make right away is making changes immediately, Bosma said.
“Some buyers (who have never) run this business a day in their life think they know more on day one than the seller who ran it for 30 years,” said Bosma. “Why did you buy it if you’re going to change it?” I tell people to wait a year before changing anything.
Not only that, buyers should want to have the seller on their team, Bosma said, adding, “And the only way to do that is to make them feel valued and honored in what they’ve done to get their business there. where is she.”
Guthrie also cautions buyers not to get emotionally involved. These emotions, she said, can work against you in the negotiation process.
“If I was selling a roaster and you were passionate about coffee and like this brand, you might not negotiate well because you are emotionally invested in the sale,” she said. “Don’t invest emotionally in the business until it is yours. “