From the Trenches - Interview With South Carolina Business Broker 'JT' Jim Tatem
Jim Tatem
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker ‘JT’ Jim Tatem
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
In the upstate of South Carolina and Asheville, Western North Carolina, we see incredible activity from both the seller and buyer sides.
Many baby boomers are looking to exit businesses they’ve built up over the last 10 to 20 years. And the next generation of entrepreneurs is in the marketplace, with money available, and no desire to work for someone else for the next 30 years of their life, to them get a watch as grandpa did. This brings both sides into a very active marketplace.
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?
Hesitancy. People “waiting to see what happens“. Mostly back in fear and uncertainty. And it’s understandable given the environment.
We have to be the master of our own destiny, we call it “controlling the controllable”. While you can’t control everything that’s going to happen around you. You can control when you make a decision, when you take action, and when you put your effort into building something to secure your finances and your famili’s future.
What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Local government giving business owners the ability to operate within safe parameters, and common sense. Whether it’s the governor, the local mayor, or other agencies – being supportive of the local business owners is what’s going to drive the economy forward.
Small businesses in America are at the economic heart of our country. Businesses in Asheville, Greenville, Spartanburg, and Anderson are all raring to go. To be open for business. To be serving their customers. To be a destination for the community to get what they need. They're driven by community members sharing common characteristics: entrepreneurship, pride in ownership, and serving the local community. These are the people that make our economic engine turn.
What do you see as the top three reasons to BUY a business in 2020?
So many of the buyers we are talking to today want to secure their future for their families in Greenville, and Asheville. They don’t want to run the risk of being furloughed or laid off again. They want the challenge, the excitement, the hard work, and the payoff that owning your own business can afford them.
Dictating their own quality of life. Most of them have always been willing to work hard for someone else in the past. Now they’ve decided if they’re going to work this hard in the future, they should work this hard for themselves.
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?
During a recent interview with a client here in the upstate of South Carolina, the buyer wanted assistance determining what type of business would be the best fit based on their background, financials, and return on investment expectation.
Working with an advisor who can help navigate the many options and has experience helping other previous buyers do the same is key.
Do they have good connections to financing resources?
Are they familiar with the landscape of independently owned businesses and franchise opportunities?
Have they helped buyers who were acquisition-minded?
Are these buyers who are first-time buyers in the marketplace?
The majority of buyers we encounter are not seasoned at researching a business, making an offer, negotiating with landlords, getting financing lined up, and getting their business started. They want a good advisor who has experience in all those things.
How would you rate the current political environment related to small business growth, business acquisition & sales?
5/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
Look at the historical figures of the business. What has it done for the past few years-month over a month, year over year? That’s a better indicator of what the future of the business will probably look like.
We have a buyer in Greenville who is now asking for March and April sales as a way to negotiate a lower price. That’s not a good indicator of the history of the 15-year business. Likely not advisable to base a purchase price on that alone. At a time when many, if not most businesses were completely closed down, this particular business is still operating at 60% capacity. That alone should say to the buyer this is a solid business that’s not going anywhere.
Many sellers are offering seller financing. 50% down. 50% over a few years depending on the purchase price. Although there are also great options available with interest late rates very low, SBA financing available on good businesses with solid performance, and good books and records.
Thoughts on business valuations in today's market?
Take a long-term perspective. Our buyers and sellers in Asheville are not looking to make a short-term investment or gain. Buying or building a business is a long-term play. There’s no question that the circumstances we just went through will have an impact on us.
Debatable how long it will take to recover completely. But recover we will. We always do. Look back over the history of our country, since 1776, haven’t we always bounced back, no matter what the odds? Think Long Term.
