Business Sales Report Summer 2020

From a business sales standpoint, business buyers have re-entered the environment looking for opportunities. These buyers are a combination of people who have lost their jobs, owners looking to expand and others looking for a deal. The number of online views and amount of inquiries from buyers has reached almost pre-pandemic levels as they see value in the marketplace. However, getting a deal to close is quite difficult in the current environment. 
 
First, for most businesses, a deal in this environment will only get accomplished when a seller realizes they cannot get near a pre-covid valuation and when a landlord is willing to give a concession on rent. The good news is that both small and large landlords are showing negotiability on offering rental concessions. 

Second, a lack of financing options available through the SBA 7a loan program and alternative lenders continues to make it a challenging environment for business owners. Lenders are wary about financing when they aren’t able to give firm business projections.

Buyers are looking for stability in uncertain times and business owners need to be prepared to present their pandemic revenue and expense numbers. For those buyers that want to buy a business that has been very successful during the pandemic, it will come at a higher cost due to the high demand. Examples of hot businesses in the current environment continue to be manufacturing and distribution or wholesale businesses. In addition, any medical related business, HVAC, liquor store business, gas station, grocery store, hardware store, auto repair shop, IT service, logistics and delivery service, janitorial business and e-commerce continue to be in very high demand among buyers. 
 
Those buyers looking at a business with higher risk due to the pandemic are looking for an asset sale. This sale offers valuable assets in the form of leasehold improvements, furniture, fixtures, equipment, inventory and transferable permits and licenses. It saves a buyer a substantial amount of money and allows their business idea to be up and running quickly. 
 
From a listing standpoint, the second quarter had noticeably fewer new listings in the New York City Metro area. As such, strong companies and business sectors continue to have an easier time getting the attention of the marketplace. The amount of new listings has continued to rise as shutdown restrictions have been eased. In the coming months, baby boomers nearing retirement will continue to supply the market, with some owners leaving prosperous businesses and receiving premium prices and others exiting in hopes of getting out before they need to pay their landlord.