It’s an exciting time: a New Year is a new start, a new beginning. Most look ahead with optimism and have an underlying excitement of what may be possible in the New Year. In the United States, we have the beginning of a new administration and, no matter your political views, everyone is relieved the election is behind us.
Moving Beyond the Election Effect
While the election is over, the election had a significant impact on the actions of prospective sellers and buyers according to the IBBA and M&A Source’s Market Pulse quarterly report, where the most recent survey of business brokers and M&A advisors (completed in October) was made public during December. As the survey results indicated, business owners (prospective sellers) and buyers in general were on the sidelines waiting to see the election results, with caution being most prominent among small business owners. With the election over, we see caution subsiding and the general positive market sentiment represented in the report is converting to increased activity among sellers and buyers.
Our Outlook for 2025
We are seeing the start of an increase in activity from both sellers and buyers and expect that trend to continue. Business owners who were on the fence about whether to sell or not are making decisions. They are sticking it out for another year or opting to take advantage of the imbalance in the market that continues with more buyers than sellers. There is a real opportunity to get your business on the market with this imbalance as there is a lack of a sufficient inventory of good, quality businesses to meet the interest of buyers.
While activity is increasing, the average duration of a deal to close is also increasing. The primary contributor for the longer timeframe is an overall increase in the level of due diligence. Sellers be prepared for a higher level of scrutiny as buyers carefully and thoroughly evaluate prospective businesses.
In addition to getting the attention of buyers, we are seeing that good, solid businesses are generally receiving multiple offers. Combine that with declining interest rates and lenders who are open to lend and now is a good time for a business owner to decide to sell, whether you are ready to retire (still the most common trigger to sell) or you simply want to do something new.
Unsure if now is the time to sell?
Deciding to sell one’s business is generally not a spontaneous decision. If you are not sure if now is the time or if you should focus the next year or so to drive more value in your business, we are happy to discuss your specific situation, your industry and goals (including with your trusted advisors) to help you reach a decision that you are comfortable with.
Buyers – Be Ready
If you are looking to buy a business, be ready to act. Get your financing secured in advance and be ready to move quickly given you are competing for fewer businesses on the market. Solid businesses with good cash flow valued at $400k and above are getting a lot of interest and unprepared buyers will be left behind if not ready to move quickly and present your best offer.
In addition to the importance of buyers having secured financing in place, it is also important to note that lenders remain aggressive to help make transactions come together. The recent IBBA and M&A Source Market Pulse report highlighted sellers being willing to negotiate creative terms into the structure of the deal including seller financing, earn outs, and retained equity.
We are excited about the start of a new year and the opportunities to help our clients achieve their dreams. Whether you have been on the sidelines or are contemplating the idea of entering the stadium, we are here to help you make an informed decision that you feel good about. Plus, we will be with you every step of the way, being the champion of your goals from start to finish should you decide now is a good time for you.
Call us or Contact us to discuss your situation and your business.
Email us or Contact us to request a copy of our summarized packet of the most recent Market Pulse Report.