Insights
Now Is The Time
July 13, 2020
If you are thinking of selling in the near future, now is the time to get to market. We are in an unprecedented time making it challenging to run a business but also to sell a business.
The M&A market is changing daily and many factors are affecting deals in 2020. We do not have a crystal ball however there are a few trends that if you are considering selling your company in 2020, then now is the time.
- This year is a presidential election year. As we begin the second half of the year, we begin to think about Q3 and Q4 2020. Buyers are actively seeking acquisitions and deals are still being completed. However, the closer we get to November, buyers will begin to focus more on the election and want to revisit their acquisition plans after the election is over. As we go into the end of the year, planning for 2021 will begin. One would anticipate that the end of the year will be quiet for the M&A market as companies, financial buyers, and others will want to see what lies ahead in 2021.
- PPP forgiveness will take place soon. Once the loans are forgiven, if the businesses have not improved their performance, we would anticipate that layoffs will continue and potentially at a higher rate than what we are currently seeing at this time. If this happens, it will continue to harm the economy as additional businesses will also fail.
- The credit market is changing daily. We are seeing lenders backing away from term sheets based on their bank’s industry exposure, small discrepancies that emerge during due diligence, and more conservative underwriting. There is talk within the market that lenders may continue to tighten their lending standards making it harder to obtain credit for acquisition. This may have a direct effect on multiples.
- While we know that the tax environment is today, we can only anticipate that long term, taxes will increase. With the various US federal initiatives related to COVID-19 and the economic decline, we suspect that the US will have to raise taxes to overcome the growing debt burden that has been created in 2020.
All these factors contribute to the M&A market, valuations, and deal structures. The best time to sell is now.
Author
Kendall Stafford
Managing Partner
Benchmark International
Share This Post
Categories
Get These Insights Delivered Directly To Your Email
Explore our curated collection today and stay ahead of the curve in M&A.
Related Posts
Seller Motivation – What Goes Into The Decision To Sell?Are you considering selling your business? Deciding when and why to sell is one of the most significant decisions you’ll ever make as a business owner. While maximizing financial proceeds is often at the forefront of these decisions, it’s essential to recognize that it’s not the only factor. Life circumstances, time with family, and other qualitative considerations can often outweigh financial gain. To help you navigate this complex process, we invite you to join our upcoming webinar: Seller Motivation: What Goes Into The Decision To Sell?Why You Should Consider Rolling Equity When Selling Your BusinessSelling a business often culminates years of hard work, dedication, and strategic planning. It marks a significant financial milestone, but how you structure the sale can have lasting implications on your financial health and future opportunities. One option that business owners frequently contemplate is maintaining a portion of equity in the business as part of the sale. This approach involves taking a portion of the sale proceeds in the form of equity in the acquiring company rather than all cash upfront. While it may not be ideal for every situation or seller, there are many reasons why rolling over equity should be carefully considered: