Talk to anyone trying to buy a house right now and they’ll tell you competition is tight. In certain price ranges, buyers need to put an offer in fast (like the day it’s listed fast) and should expect stiff competition. According to data from Zillow, new for-sale listings are down about 25% over a year ago but house values are up 4.3% year-over-year.
We might be seeing a similar phenomenon in M&A. When we take a business to market, we typically field 35 qualified buyers (i.e., formal, vetted requests to sign a non-disclosure agreement) in about 60 days. But we recently took a Northeast Wisconsin business to market and completed 43 signed NDAs in just two and a half weeks.
That’s unheard of. And it tells me that there are plenty of buyers still looking.
In one M&A survey recently reported in Harvard Business Review, 51% of corporate development leaders reported a “temporary hold” on deal development until the nature of the economic recovery is clearer. Another 14% reported a full stop in activity. But 23% of buyers indicated either no plans to alter their current acquisition strategy or plans to accelerate deal volume through 2020.
We’d been operating in a seller’s market for several years prior to the pandemic, with more buyers than sellers in the market. Development teams worked hard to get out ahead of opportunities and find creative ways to meet their acquisition targets.
Now, we know that many of those teams have dropped out of the race. But so too have many sellers. Inventory is down, so if you’re selling right now in certain sectors you can get more attention to your deals.
It’s not the right time for everyone, but if you have a resilient business model, buyers are still looking. Show buyers a fast rebound and they’ll pay for your strong future – ignoring any temporary blips this spring.
By Scott Bushkie
Scott Bushkie is Managing Partner and Founder of DealCoach.
With more than 20 years in the Mergers and Acquisitions (M&A) industry, Scott is a recognized leader in the field, providing exit strategies, business valuations, and M&A advisory services to business owners in the lower middle market. He has successfully executed sales to domestic and international buyers, private equity firms, family offices, and strategic buyers. Follow DealCoach on Linkedin
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About DealCoach
DealCoach is headquartered in Green Bay Wisconsin with an office in Milwaukee Wisconsin and helps customers find out how much their business is worth with online business valuations and advisory services. Our business valuations also known as an Estimate of Value (EOV), help prepare buyers and sellers for the sale. DealCoach also helps business owners grow value with a Business and Market Analysis and plan for retirement, estate & financial planning, benchmarking, and strategic planning. DealCoach servers and has provided business valuations for businesses located in the United States and Canada.
We are here to tell you what you need to hear in order to make a well-informed decision with most likely the largest financial transaction of your life. Our team has over two decades of M&A experience, and we have been completing Estimates of Value for our clients for over nine years.