It’s been a long couple of years in the business world, and even more so for those contemplating buying or selling businesses.
In my line of work – helping bring business buyers and sellers together – I am asked a lot of questions about businesses, including what motivates a seller to sell and a buyer to buy. One question I was asked recently was if “burnout” is a factor in business transactions. Are would-be buyers looking for a change because they are burned out where they work, and did the whole COVID remote versus in-office work situation factor into this?
Actually, we don’t see burnout as a factor with individuals seeking to purchase businesses. It may exist somewhat, however, on the seller’s side of the equation.
Why is this?
Consider first the large number of baby boomers looking to transition businesses. In fact, a Forbes article states that the number of baby boomer businesses account for 40 percent of businesses in the United States today, and that 10,000 baby boomers retire each day. In many of these family businesses the next generation is not always ready to step up and take the reins.
And then there is the COVID effect. COVID-19 caused a great deal of uncertainty for business owners. In March 2020 no one knew what would come next, how long pandemic restrictions would last, and what impact there would be on businesses and their owners. Two and a half years later, we have a better handle on all of that. And it’s probably fair to say that some portion of business owners, having been through the challenges of COVID-19, may feel a desire to put it behind them and transition their businesses to new owners. Put in context, though, it’s probably a small portion of business owners who fit into that category. People sell businesses for all different reasons.
And who’s buying?
A Business News Daily article cites freedom, satisfaction and flexibility as among the key reasons people seek to purchase businesses.
We see prospective buyers coming from several groups. There are the private equity companies wishing to buy profitable businesses. Another group is the executive or “MBA buyer,” typically men and women in their early 50s who have held executive positions, were able to earn some good money and are now interested in a new opportunity. While this group of buyers may not be “burned out” from their current positions, they may have some level of concern that if the economy hits roadblocks their salaried positions could be eliminated. Employees in this group may typically think “I can do this on my own.”
Add in the “COVID-19 factor.” Working from home has opened the eyes of many corporate workers who have tasted the sense of flexibility that they believe could be theirs if they ran their own businesses.
The environment for purchasing businesses is positive, despite interest rates on the rise. Many see the market positively, and understand the advantages of stepping into an existing business with a positive cash flow and a team of employees in place, as opposed to having to “go it alone” and start from scratch.
As people take a breath after the last two years of COVID restrictions, prospective buyers will find a strong market with many opportunities to purchase businesses across a wide range of industries. We see people on both sides – sellers and buyers – coming out of their shells and giving the market another look.
Denis Mezhiritskiy is president of ROI Corporation, http://roibusinessbrokers.com, located in Rockland.