April’s Most Wanted Businesses!

Written by: Sean Mayers on May 19th, 2020

It’s time to share some insight into the Business Resale market during the Covid period.  Strange times indeed, but activity levels have actually increased.  Let me explain.

 

True, it’s been nigh-on impossible to transact a business resale during lockdown.  We have sales agreed on some fabulous businesses, but how can a buyer complete the deal when the business, right now, looks nothing like it did in January or February 2020?  A business’ March-April performance figures and business structure look nothing like historic norms.  The income figures on a target acquisition may not, for the moment, be able to support any finance that is part of the sale price.  However, whilst deal completions are thin on the ground, buyer activity is far from slack!  The savvy buyers appreciate that good, solid, robust businesses will bounce back and that this temporary (we hope…!) blip will pass.  Whilst there will be casualties, many businesses will emerge stronger and with a reputation for being able to withstand turmoil.  Let’s take a look at a few sectors where we have had the most activity over the past weeks:

 

  1. Property Businesses.  Lettings and Estate agencies.  Demand never dries up from established operators, both franchised and independent, looking for acquisitions.  Here’s a strange twist though:  whilst Brexit kept the corporate job-leaver safely tucked up in the mid-range salaried positions, Covid has sent a reminder that no job is secure and the ambitious corporate types see better security in businesses with repeat income streams.   We have seen a marked upturn in enquiries from individuals looking to acquire property businesses.
  2. Commercial Cleaning.  We have some juicy cleaning companies for sale, but many are having a tough time right now.  However, buyers realise this is temporary.  The business and commercial premises they service may be closed, therefore after the final lock-down clean there’s no work for a while.  Yet, there’s high confidence that these businesses will return to greater levels of demand than previously.  Why?  Compliance, health and safety, looking after the workforce.  In an environment where there’s a vicious virus looking for its’ next host, which business owner is going to cull the very service that keeps the premises clean and that ensures the staff feel that are turning up into a well-maintained, clean environment?  Up-selling those additional cleaning products and the once-weekly steam/disinfect/deep clean treatments has just become easier.
  3. Buildings Maintenance and Restoration.  The construction sector, or more appropriately the reconstruction sector, remains in demand.  The presence of a pandemic does not stop the incidences of domestic accident, burst pipes, fire damage, etc.  Moreover, homeowners are looking for improvements as they realise the overseas holiday may not happen for a while, therefore best to ensure the garden is looking pristine and is a fun place to be.  One of our clients’ businesses constructs sheds, pergolas, decking and bespoke outside buildings.  They have never been so busy.
  4. Beauty, Hair and Wellness Salons.  Strange, that in a time where they cannot earn any money, demand for resale salon-type businesses is very strong.  Just as in the housing sector, there is pent-up demand.  Nails and hair never stop growing (for most of us anyway!) and coloured hair has a nasty habit of returning to grey.  When lockdown measures are eased, expect salons to be rammed and booked well in advance.  When discussing some of our listings with buyers, we frequently hear the comment ‘I know it can’t be bought now, but when the business returns to normal consumers will appreciate the value and service more than ever’.
  5. Cafes and Catering.  Q – Who’s enquiring on closed businesses with decimated revenue?    A – The furloughed worker who really doesn’t fancy the thought of returning to the office full-time.  The very same home-bakers who are watching celebrity Masterchef and Bake-off and who are plying their neighbours with fresh cakes, scones and treats (when they can buy flour!).  The thought of serving their communities via a lovely cafe can be more appealing than the prospect of another year on the job.

 

What we are seeing every day is mindset switch from business owners and from their potential buyers.  An enforced 2-month shut-down, or minimising of business activity can be the trigger for a business owner to decide to sell.  Conversely, some are bouncing back to work eager to grow like never before!  Many amongst the employed workforce are wondering how secure their job really is.  “Will the boss find a way of outsourcing my role or is there a software platform that can replace my output?”

 

So, the good news is that if you are a business owner looking to sell, the buyers are still here and in fact, they are more serious than before.  In April and May we have had to swat-away fewer tyre-kickers in order to get to the genuine buyers.

 

Stay positive, focus ahead and call us should you need a confidential chat. 

 

Sean.