A Quick Look Into the Merger and Acquisition Market - What's Hot And What's Not
What the Buyer and Seller Market Shows Us
Encouraged by low interest rates and concerned about pending tax changes more and more sellers and buyers are entering the arena.
We’re seeing a very interesting trend as we continue to see businesses pop up around the country. Deal volume is up. Now, lending companies are gaining a lot of attention given the increase of business acquisition as it supports the merger and acquisition market. On a business level, it will be interesting to observe the supply chain, PPP funds, and SBA options as businesses continue to operate. Looking to sell or buy? Read on to dive more deeply into the M&A market to see what’s hot and what’s not.
Commercial Real Estate is Booming
Contrary to what previous data suggests, commercial space as it relates to brick and mortar is making a comeback. The pandemic brought retail sales down significantly. However, with the vaccine and awareness, there’s been an increase in retail, particularly as it pertains to brick and mortar sales. Recent data suggest that in addition to the vaccine, more people are looking forward to shopping in person, increasing sales, and bringing the brick and mortar stats back to normal. Just in time for the Holidays.
Inevitably, interest rates will begin to rise. Many business owners have seen this time as an opportunity to position themselves more comfortably for a sale. For example, many brick and mortars are renovating and improving their current space with the additional lending to attract prospective buyers. Whether you’re looking to sell your commercial space or buy, perhaps it’s worth researching commercial real estate. Checkout our current BizNexus commercial listings today.
Home Improvement Businesses Are Popular
During the pandemic, Home Depot experienced a 20% growth in sales. Many businesses were closed down and what better way to spend your time than to make home improvements. Contractors can take advantage of the low interest rates and increase in demand for housing remodels.
Research indicates steady growth over the next five years, driven mainly by a continued rise in per capita disposable income.
“Without question, the need for home improvement projects remains strong, from maintenance touch-ups and new roofs to massive remodels and full-on reconstruction”
As per capita disposable income rises, we will continue to see an increase in demand in home improvements and contract work.
Home Healthcare is Entering the market
Though it’s hard to start home healthcare businesses, these listings have shown to have a lot of buyer interest. Those looking to exit the medical confines, have begun their own healthcare endeavors by providing services from their homes.
Pizza Shop sales are through the roof
Unless. Unless a prospective buyer has been in the food service industry before, it’s becoming increasingly difficult to sell foodservice businesses. Additionally, this does not hold true across the board. Franchise opportunities have seemingly been shown to have success in the current market. So, it really all depends on the buyer. Pizza shops are rocking and rolling! From 2016-2020, $46.24 billion dollars were spent by pizza lovers. To that, when thinking of ways to meet consumer demand, takeout establishments are booming. Those in the industry who’ve pivoted their business model to appease their patrons have seen an increase in profit margins and cash flow.
Market Trends That Have Remained The Same
Moreover, franchises are still popular and the less risky of business opportunities. Granted, each deal is different and many factors come into play when owning and operating a business. Contract work has always been in high demand and given the circumstances, home healthcare is on the rise for both economic and obvious health reasons. If you can keep up with the demand and have the necessary expertise and capital to begin, data is showing a boom in home healthcare. I encourage those interested in following business trends to look at market data and research trends.
Additionally, if you can, take advantage of the low interest rates and the opportunity for cheap money by making improvements now. There is still buyer and seller action, contrary to what you may be seeing in the market. We may not see another time where money comes to us at such a low cost.
Broker and Buyer Concerns
Where have all the workers gone? Weekly and monthly P&L’s are now more important than they ever were. Yearly numbers have become less important than weekly and monthly P&Ls. When it comes to buying a business or selling a business, additional requests for financials over short and longer period of time are the norm. Consider putting together a due diligence lists from business accountants. When it comes to concerns from buyers, this relates to any governmental approval; anything related to government is significantly delayed. Solution: Start the process earlier.
Summary
To conclude, it’s time to do business with actual books. Gone are the days where you can make money and not have to track profit and loss. To that, now is the time to take a look at interest rates that you may never see again. With increase awareness and the availability of the COVID-19 vaccine, many industries that faced some significant profit loss are now seeing a nice upward trendline.
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