From the Trenches - Interview With Texas Business Broker Bob Fariss
Bob Fariss
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Bob Fariss
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
Sellers are starting to identify under-utilized assets are considering liquidating them. Perhaps it's an entire business; or maybe just a part of it. Some entrepreneurs have several investments and are thinking it would be good to jettison a low performer. Master franchise owners may have areas they really don't have time to properly service and are looking at reducing. This is a good time to focus.
Business opportunities in today's market may have historic value, but buyers are purchasing future value. Because of the future uncertainty, many sellers believe they just have to wait to liquidate. However, Seller's can either discount the present value of future cash flows for today's risk of uncertainty or offer terms that place the final value and payments into the future where they have been actually realized. There are options.
What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?
Dealing with uncertainty by doing nothing. These are times to focus on what works, not dwell on not working.
What do you see as the top three things the government needs to do to support main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Address future liability issues that may trap business owners.
Develop ways to communicate safe ways to live and work.
Continue to invest in job development through the SBA and similar programs.
What do you see as the top three reasons to BUY a business in 2020?
Funding has never been this available
Positioning for a new future normal.
Becoming more essential.
What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?
How are you addressing the current market uncertainty?
What value can your exit planning have today?
How would you rate the current political environment related to small business growth, business acquisition & sales?
3/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
Terms must address the risk that future customers will not act like past customers. That can be addressed by discounting future cash flows, having terms based on actual future performance, or offering a "mentoring" sale where the seller retains some equity and mentors the buyer the grow the business before selling the remainder.
Thoughts on business valuations in today's market?
Different approaches to valuation will produce greater variances than ever before. Of all the approaches, market comps (industry multiples) will be the most suspect.
