From the Trenches - Interview With Florida Business Broker Shaun Thornton
Shaun Thornton
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Shaun Thornton
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
It will be more important than ever that businesses are brought to market that can truly demonstrate actual and financial performance. Businesses that are well prepared and realistically valued will sell. The decisions that the SBA and financial institutions take in the near future will shape the sale of privately held businesses for the next 2 to 3 years. Those of us who were around in 2008 well remember how difficult it was to get funding for deals in those days.
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?
Availability of financing for deals. There are 3 players in the game, the seller, the buyer, and the bank. Without the involvement of the banks, there is only one solution, the seller has to be prepared to assist the deal by holding a Promissory Note.
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?
Everything in the Orlando area revolves around tourism. As the world starts to emerge from the crisis it will be critically important for support to be given by the Government to the travel industry. Airlines, cruise lines, hotels, and theme parks will need help coming out of this or we are going to see the disappearance of major players in the travel industry. Equally, the SBA has to be ready to help the transfer of small business owners or the dreams of many sellers and buyers will be dashed.
What do you see as the top three reasons to BUY a business in 2020?
A tremendous opportunity for business buyers to take advantage of the SBA offer to pick up the first 6 months’ principal and interest payments of an SBA 7(a) loan. What a boost for buyers in that critical initial period of ownership.
After years of running a small business and experiencing several downturns, we could finally see the retirement of the baby boomers that have been predicted for so long. When that happens there will be many tremendous, well-established businesses available for sale and probably at the right price.
During the last recession, we saw executives who had lost their positions turn to private business ownership. Undoubtedly it will happen again. We had 75 million visitors in Orlando last year, it's a great place to live as well as to visit.
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?
Business owners should ask advisors the following questions:
What do you do to earn your fee? Why do I need a broker? How long have you been selling businesses?
What is the current market for small business sales looking like in the Orlando area? What should I expect if I put my business on the market today?
Tell me about your experience in selling my type of business.
What about my business would attract someone to buy it? On the other hand, what do you see as a major impediment to the sale of my business? What should I do to improve my chances of sale and to improve the price that I can achieve?
How do you search for buyers? When buyers come to you what specific steps do you take to ensure that they are not going to be wasting my time?
What happens when an offer is made? If we go under contract how will we get to closing?
What other expertise will I need to help me through the sale of my business?
How would you rate the current political environment related to small business growth, business acquisition & sales?
4/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
Buyers will wish to protect themselves in whatever way they can. Whether it be asking for an earn-out to be included or for a forgivable Note to be held buyers will want to see something included in the deal. If sellers think that they can get the kind of premiums that we saw beforehand then they are wrong.
We're back to the first principles. For example, in the Orlando area, the bottom has dropped out of the previously buoyant short-term rental market overnight so associated businesses such as property managers and maintenance businesses are struggling. Any that can hang through this will be seen to be a successful business.
Thoughts on business valuations in today's market?
Good businesses properly prepared and sensibly valued will sell. However, a great deal will depend upon the availability of funds from the banks backed by the SBA.
If that lending dries up as it did 12 years ago then the spotlight swings onto the seller and we have to ask them to hold a Note. If the seller is not prepared to do that then we have to question whether the business should be listed for sale.
