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Business for Sale Market During COVID-19: A Paradox of Unique Opportunity and Uncertainty

By: BizBuySell –
BizBuy Sell Confidence Index
(BizBuySell Confidence Index — click image for larger view)

New data from BizBuySell’s small business confidence survey and recent business for sale transactions reflects a market driven by opportunity seekers and business owners, either well-positioned to profit or forced to exit.

BizBuySell’s 3rd quarter 2020 Insight Report, a nationally recognized economic indicator which aggregates statistics from business-for-sale transactions, shows a steady upward trend in sales since the pandemic hit. In April, transactions showed a 51% year-over-year decline, shrinking the deficit to 21% in July, and then just 5% fewer deals in September.

The catalyst behind the resurgence appears demand driven. According to BizBuySell’s 2020 Small Business Confidence Study, buyer confidence reached a record high of 60 compared to 53 a year ago.

The Small Business Confidence Index scores sentiment on a range from 0 to 100, using survey responses from over 2,300 small business owners, with 50 representing neutral confidence and 100 representing certainty and an idealized, perfect environment. Of buyers surveyed, 57% believe they can buy a business for a better value than last year. This is a dramatic turn as just 17% believed the same when asked in 2019. Click To Tweet

Closed Small Business Transactions
Closed Small Business Transactions – click image for larger view)

Separately, owner confidence fell to a low of 45, down from 52 in 2019, with the primary driver being concerns over business value. Owners validate buyer sentiment, with 68% surveyed believing they would have received a better value if they had sold last year — almost double the 37% surveyed in 2019. Intuitively, 71% of these owners pin lower value on being impacted by the pandemic.

“We’re a Corporate Caterer. Our minimum order used to be 25 guests, now we’re lucky to cater 10 lunches, bringing our revenue down 80 – 85% since this same time last year,” said Kelly Kearney of Pacific Fine Foods in Alameda, California. Fortunately for Kearney, she’s been able to adapt her business model and is now in the process of finalizing the sale of her business during the pandemic.

According to Emmet Apolinario, CEPA, CVB of Sunbelt Mergers & Acquisitions in Ohio, there’s plenty of interest in these pandemic impacted businesses that can adapt. “If the business has been negatively affected but is open now and has evolved into something suitable to the pandemic, buyers do still find them attractive,” said Apolinario. “For example, a bakery I am representing took six weeks to implement an online ordering system. Not too long ago they were forced to close, and now they’re under contract to be sold.”

About BizBuySell: BizBuySell is the Internet’s largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 45,000 businesses for sale and more than 1.4 million monthly visits. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry’s leading franchise directories.

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