Scarcity of Business Sales During COVID-19 Pandemic May Present Opportunity for Selected Business Owners

Frank C. Sutherland | 07.22.20

COVID-19 has created uncertainty and disruption for many businesses across market segments and industries. Accordingly, it should come as no surprise that many business owners are hunkering down for the next year or so, and postponing what would have otherwise been near-term sales of their businesses. COVID-19 should not, however, cause business owners to automatically conclude that a business sale is not feasible at this time. In fact, for some business owners, this may be a time to expect healthy competition among buyers for the purchase of their businesses.

There is reason to believe that the current market may present opportunity for businesses we have come to know as ​“essential businesses” or other businesses whose profitability has been unaffected, or in some cases even enhanced, during the COVID-19 pandemic. The package delivery industry provides just one example of such a market segment. At the same time, it has been widely reported that equity groups and other investors have a significant amount of cash to deploy, although they are encountering more limited opportunities for investment than prior to the onset of the COVID-19 pandemic. Under these circumstances, businesses whose profitability has either remained stable or increased over the past months are likely to draw greater attention from potential buyers, when holding other factors constant. In short, there are fewer opportunities being chased by a similar number of investors, many of whom have pressure to deploy cash on behalf of their stakeholders.

If you are a business owner contemplating the sale of a business, we would be happy to speak with you about the potential sale of your business. We would also be happy to connect you with other advisors who are experienced in the process of preparing businesses for sale and bringing businesses to market. 

• Mergers & Acquisitions