Most business buyers and sellers are wondering what 2021 and beyond will bring. BizBuySell and BizQuest President Bob House provided a range of insights stemming from BizBuySell’s 3rd Quarter Insight Report and a survey of over 2,300 business owners.
The simple fact is that the pandemic has most definitely had a major impact on the buying and selling of businesses. This fact is obvious. But diving deeper, there are a range of insights that can be gleaned.
First, owners do understand that COVID is a massive force in business right now. According to the survey, 68% of owners feel that they would have received a better price for their business in 2019 than in 2020. Only 37% of respondents felt that they would receive a better price this year. Of owners who felt that they would receive a lower price in 2020 than in 2019, 71% of these owners said that their assessment was directly tied to the pandemic and its accompanying economic impact.
A question on the survey asked owners if the pandemic had impacted their exit plans. 55% responded that the pandemic had not changed their exit plans. Additionally, 22% said that they now planned on exiting later, and 12% stated that they planned on exiting earlier. In short, the majority of business owners were not changing their exit plans.
On the other side of the coin, buyers are acknowledging that the present seems to be a very good time to buy. A staggering 81% of buyers stated that they felt confident that they would be able to find an acceptable price point. In terms of their purchasing timeline, 72% of respondents stated that they were planning on buying a business soon. Survey follow-ups indicated that large numbers of buyers were also planning on buying in 2021.
Generational differences are playing a role as well. Baby Boomers tend to be more optimistic than non-boomers as far as their overall views on the recovery. 43% of Baby Boomers now expect the economy to recover within the next year as compared to just 30% of non-Boomers. House pointed out, “Baby Boomers are the generation that did not plan, which makes it harder for them to adjust transition plans if they were preparing to retire, as small businesses don’t have the infrastructure and management teams in place to wait out a bad cycle.”
Based on the information collected by BizBuySell’s 3rd Quarter Insight Report and their survey, it is clear that there is a new wave of buyers on the horizon. The report supports the notion that the pandemic has made small business ownership an attractive option for new entrepreneurs. Factors driving new entrepreneurs into the marketplace include everything from being unemployed and wanting more control over their own futures to a desire to capitalize on opportunities.
Finally, House notes that 2021 could be a “perfect storm for business sales,” as 10,000 Americans will turn 65 each and every day. This means that the supply of excellent businesses entering the marketplace will likely increase dramatically.
The post Insights from BizBuySell’s 3rd Quarter Insight Report appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Goodwill is a term that might cause a little confusion for some. But at its heart, it is a relatively straight-forward concept. Goodwill is generally viewed as a term that encapsulates everything from a business’s reputation to the goods, services and products it provides. The key idea is that there is goodwill if the business is viewed as a true and functioning business that has longevity in the marketplace.
The Importance of Reputation
It is important to point out that many of the aspects that go into defining goodwill are not easily noted on a balance sheet. One of those elements has already been mentioned in the form of reputation. A good reputation is an intangible asset that is hard to put an exact dollar amount on. Imagine that you had a choice between two businesses that were almost identical. However, one business enjoyed a strong reputation while the other had a reputation for poor customer service and goods and services. This decision would be an easy one for most prospective buyers.
Going Beyond the Numbers
When a buyer pays more than the recognized value of a business, goodwill usually plays a major role. There are many variables that can be included into goodwill such as quality and track record of management; strength of the local economy; the loyalty of the customer base; good relationships with suppliers; copyrights; trademarks and patents; name or brand recognition; specialized training and knowhow. The list goes on. Business brokers and M&A advisors will be sure to highlight these goodwill factors to prospective buyers. Factors that impact the longevity of a business, and its long-term potential, should not be overlooked.
The Evolving Meaning of Goodwill
In recent years, the accounting profession has changed how it deals with the concept of goodwill and how it is factored into decisions. Since the rise of the Industrial Revolution, many large companies were built around the ownership and use of heavy equipment and machinery; however, in the last two decades there has been a shift away from tangible assets and towards intangible assets.
Assets under the umbrella of intellectual property, including patents, trademarks, brand names and more, are now considered key aspects of goodwill. In short, in the last twenty-years, goodwill has taken on a more complex and varied meaning. Today, businesses are not necessarily based around massive factors and huge assembly lines. Workers and management in the world’s largest companies 50 years ago would be hard pressed to explain the inner workings of some of today’s corporate juggernauts.
Goodwill is more complicated than ever before. This factor serves to underscore the value, and importance, of working with an experienced, capable and proven business broker or M&A advisors. The goodwill elements within a business need to be highlighted so that prospective buyers fully understand the business’ real value.
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Linda A. Collett, a GABB affiliate member, passed away unexpectedly at home on October 19, 2020. She was 60 years old.
Linda was born on April 14, 1960 in Los Angeles, California to Cyril Reed and Audrey Collett and grew up in Thousand Oaks, California. She attended Thousand Oaks High School, the University of California, San Diego and graduated from the University of California, Berkeley with a degree in Business Administration.
Linda entered the business world after college and worked at several firms in Sacramento until she was transferred to Chicago in 1996 and then to Atlanta in 1998, where she fell in love with the city and made it her permanent home. In 2003, after 17 years in the corporate world, Linda left her position as Assistant Vice President of Risk Management Technologies at Marsh, LLC, a global insurance brokerage firm, to attend law school full time. She graduated cum laude from the Georgia State University College of Law in 2005 and opened The Collett Law Firm, a boutique law firm in Marietta specializing in starting, growing and selling businesses in the Atlanta area.
Linda was passionate about helping others and invested over 300 hours in training and study to become a certified professional coach. She was also a very active volunteer in the Professional Women’s Information Network (ProWIN) and served on the Board of Directors and Advisory Board for many years, in addition to serving two terms as the organization’s president. Linda enjoyed public speaking and spoke regularly at business groups in the Atlanta area and taught “Legal Issues for Small Businesses” at the Kennesaw State University Small Business Center for several years.
In her limited free time, Linda enjoyed yoga, taking courses on spiritual and personal growth, and recently began kayaking on Georgia’s beautiful lakes and rivers.
Linda is survived by her parents, Audrey and Reed (Cy), her brother, Dave, and by several cousins, nieces and nephews. She would not want her family, friends and colleagues risking their health at a public service during these difficult times, but condolences may be sent to CondolencesForLinda@yahoo.com and donations may be made to ProWIN or to the Georgia State University College of Law.
GABB November 24, 2020, Meeting Agenda Overview
To attend this meeting, to be held via Zoom link, you must register online.
2021 GABB Board Of Directors Vote today:
- GABB President: Judy Mims
- Vice President: Matt Wochele
- Treasurer: Jon Roman
- Secretary: Greg DeFoor
- Past President: Dean Burnette
- Historian: Pam Walker
- Board Member At Large: Tanya Nebo
- Board member at Large: George Hilliard
- Affiliate Board Member (non-voting): Kim Eells
Updates on Membership, listings, website traffic
Member Introductions: 30 seconds or less
- Broker Members
- Affiliate Members
Dean will talk about the GABB’s Million Dollar Club. Our 17 Million Dollars Club members for 2020, who will be recognized at the Dec. 10 Holiday Gala, represent more than $58 million in sales transactions during the qualifying period; this was up by $3 million in spite of COVID-19 and all of the turmoils of 2020!
Dean will update members on plans for the GABB Holiday Gala on Dec. 10. Please contact Dean to RSVP, if you have not gotten your invitation, or if you have any questions about the event.
Please log in to your GABB.org member page, go to Dashboard, then Forum, then Subscriptions. (Hint, if you don’t remember your password, you can reset it. Be sure to check your SPAM folder for the email to reset the password.) This is the place where you can subscribe to the forums to get notices when people post. It is a great way to hear the latest news, possible referrals, and contribute to helping other members! You can also post here and ask questions.
Our sponsors and affiliates are important to us, not just for providing financial support and meals for our meetings. They are our best resources to close deals quickly and smoothly. Find all of our affiliates on our Professional Resources Search on the GABB.org homepage.
Posting and updating your listings to the GABB site will help our SEO a LOT! It is a cooperative effort that will benefit us all.
Vision – Our vision is to be globally recognized as one of the most credible business brokerage associations. This recognition will be earned through providing education and resources along with setting high standards for our Brokers and Affiliates.
Adjourn: If you have questions, comments, or suggestions for our meetings or the Board of Directors please contact Dean Burnette, email@example.com 912-247-3209 or Diane Loupe, firstname.lastname@example.org 770-744-3639
One of the purposes of the GABB is to provide leadership and resources to promote professional business brokerage and to provide education and resources to improve our profession. To establish a multi-faceted communication system to among members, buyers, and sellers and the resource industries needed to accomplish the sell and purchases of businesses in Georgia. To facilitate interaction among industry professionals to foster abetter understanding of business brokerage.
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For every reason that a pending sale of a business collapses, there is a positive reason why the sale closed successfully. What does it take for the sale of a business to close successfully? Certainly there are reasons that a sale might not close that are beyond anyone’s control. A fire, for example, the death of a principal, or a natural disaster such as a hurricane or tornado. There might be an environmental problem that the seller was unaware of when he or she decided to sell. Aside from these unplanned catastrophic events, deals abort because of the people involved. Here are a few examples of how a sale closes successfully.
The Buyer and Seller Are in Agreement From the Beginning
In too many cases, the buyer and seller really weren’t in agreement, or didn’t understand the terms of the sale. If an offer to purchase is too vague, or has too many loose ends, the sale can unravel somewhere along the line. However, if prior to the offer to purchase the loose ends are taken care of and the agreement specifically spells out the details of the sale, it has a much better chance to close. This means that a lot of answers and information are supplied prior to the offer and that many of the buyer’s questions are answered before the offer is made. The seller may also have some questions about the buyer’s financial qualifications or his or her ability to operate the business. Again, these concerns should be addressed prior to the offer or, at least, if they are part of it, both sides should understand exactly what needs to be done and when. The key ingredient of the offer to purchase is that both sides completely understand the terms and are comfortable with them. Too many sales fall apart because of a misunderstanding on one side or the other.
The Buyer and Seller Don’t Lose Their Patience
Both sides need to understand that the closing process takes time. There is a myriad of details that must take place for the sale to close successfully, or to close at all. If the parties are using outside advisors, they should make sure that they are deal-oriented. In other words, unless the deal is illegal or unethical, the parties should insist that the deal works. The buyer and seller should understand that the outside advisors work for them and that most decisions concerning the sale are business related and should be decided by the buyer and seller themselves. The buyer and seller should also insist that the outside advisors keep to the scheduled closing date, unless they, not the outside advisors, delay the timing. Prior to engaging the outside advisors, the buyer and seller should make sure that their advisors can work within the schedule. However, the buyer and seller have to also understand that nothing can be done overnight and the closing process does take some time.
No One Likes Surprises
The seller has to be up front about his or her business. Nothing is perfect and buyers understand this. The minuses should be revealed at the outset because sooner or later they will be exposed. For example, the seller should consult with his or her accountant about any tax implications prior to going to market. The same is true for the buyer. If financing is an issue it should be mentioned at the beginning. If all of the concerns and problems are dealt with initially, the closing will be just a technicality.
The Buyer and Seller Must Both Feel Like They Got a Good Deal
If they do, the closing should be a simple matter. If the chemistry works, and everyone understands and accepts the terms of the agreement, and feels that the sale is a win-win, the closing is a mere formality.
The post What Makes a Deal Close? appeared first on Deal Studio – Automate, accelerate and elevate your deal making.