American Business Brokers - October 2020

American Business Brokers - October 2020

American Business Brokers & Advisor Founder & President PROFESSIONAL INTERMEDIARY & MARKET MAKER FOR PRIVATELY HELD COMPANIES Author of ‘The Art of Buying and Selling a Convenience Store’ & ‘Hidden Wealth’ Involved in the Sale of 800+ Businesses Advisor • Consultant • Speaker

Are You Buying or Selling a Business? WWW.TERRYMONROE.COM OCTOBER 2020

800.805.9575

Why It’s the Best Time to Do So

Recently, I wrote an article about buying and selling businesses in the middle of a pandemic, and it was published in CEOWORLD Magazine. This is an abridged version of that article. As much as we don’t want to admit it, most everyone is guided more by their emotions than by logic. In many cases, when we’re convinced that we’re making a logical decision, we’re actually trying to justify emotion-based decisions. With that in mind, is now — in the middle of a pandemic — a good time to conduct business acquisitions? Or should we just hunker down and try to ride things out? The COVID-19 pandemic has disrupted our businesses and our lives for months now. However, it has also created several opportunities for buying and selling businesses. Even before the COVID-19 ravaged the globe, I was shouting from the mountaintops that the best time to buy businesses is today. Money will never again be this cheap and accessible. This also means it’s a good time to be a seller — because cheap money helps increase the value of companies. Whether you’re a buyer or a seller, now is prime time for big decisions, because both parties win. Opportunity Knocks ... Two industries where the pandemic has created opportunity are hotels and restaurants. If you are the owner of one or several hotels, there is a good chance you may go broke, and the future probably doesn’t look too bright either. However, one business owner’s end is another’s beginning. I know someone who owns some hotels and is actively trying to acquire more hotels by either buying from or buying out his competitors. And why not?

option. By owing the seller some money, I have a partner who is invested in my success and will be there to answer my questions. If it is an all-cash deal, then expect to get a discount. Do your due diligence. And then do it again. Remember, nobody knows more about the business than the person who has owned it for years and now is trying to sell it to you.

On the other hand, if you’re trying to sell, do the following:

Money is cheap and the hotel concept is still good. It’s just going through a down cycle.

Prepare meticulously. Think of selling your business like selling your house. Make sure all your equipment works and get all your financial books and records in order to better help the buyer understand what they’re getting into. Be specific. Have a list of both the physical and intellectual assets you’re selling. The last thing you want is a misunderstanding of what is being sold. Get a valuation. Find out what the business is worth ahead of time. Most people know what their cars and homes are worth, but many business owners don’t have a clue what their businesses are worth — even though it’s most likely their most valuable asset! This pandemic is bad, but the world will keep turning and people are going to keep buying things. If you’re serious about staying in business, the last thing you want to do is look back on what you missed as a buyer. If you’re a seller, you don’t want to regret the piles of money you left on the table.

The same thing is happening in the restaurant industry. About 20% of restaurants open prior to the pandemic are now closed for good, but several competitors and startups are already taking their places — literally. They’re renting their old locations, and either expanding on an existing concept, or opening something new altogether. The most successful businesses have always been the ones that look toward the horizon. They invest for generations, not for just 5–10 years.

If you’re thinking of buying a business right now, do the following:

Be prepared to kiss a lot of frogs. You might have to go through 10, 20, or even 30 business opportunities before you find the right one. Acquire lots of information. You want lots of >Page 1 Page 2 Page 3 Page 4

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