Have you been toying with the idea of selling your business in the near future?

If so, you’re not alone. Record numbers of your fellow business owners are giving this idea serious consideration, especially after dealing with a turbulent and uncertain 2020. The good news for those considering selling is 2021 is shaping up to be a once in a generation opportunity to sell a business for top dollar and under highly favorable term.

This is a result of the following elements coming together to create a proverbial “perfect storm”:

  • It’s a Seller’s Market right now. There are simply too few quality businesses for sale to meet buyer demand.

  • Business that sold in the 2nd half of 2020 were valued at higher multiples than at any other time in recent memory.

  • Interest rates remain at historically low levels, fueling increased buying activity.

  • There is now optimism in the market that the worst of COVID’s impact on our economy and our country appear to be finally behind us. The positive momentum this created at the end of 2020 is carrying over in a big way into 2021.

It’s hard to imagine that only 6 months ago, much of our economy was in a lockdown. Even the best of businesses weren’t selling as buyers and banks took a “wait and see” approach.

Taking all of these elements into account, I trust you can appreciate why I feel so strongly that 2021 will be a “perfect storm” for selling a business. Of course, all situations are unique and the desirability of your business in eyes of a buyer is partially dependent on how COVID impacted your business in 2020. The good news is that even if this impact was a negative one, as long as your business is back on track, meeting pre-COVID performance levels, the value of your business may not have been negatively impacted.

Capital gains taxes will also be increasing under President Biden. If you have considered selling your business, we can help you decide if it is the right time.

Thank you,

Sunbelt Minneapolis Team

The business brokerage market currently weighs heavily in favor of business owners seeking to sell their business. There are too few quality businesses for sale to meet buyer demand. Businesses that sold in the 2nd half of 2020 were valued at higher multiples than at any other time in recent history. Interest rates remain at historically low levels, fueling increased buyer activity and bank lending.

A significant Buyer-Borrower motivation is being provided by the Small Business Administration’s resumption of borrower benefits under the COVID driven federal funding Section 1112 of the Care Act-March 2020.

If you are a business owner contemplating the sale of your business, there is not a better time than right now.

SBA COVID Relief Act, 2021

“Consolidated Appropriations Act, 2021”

• Provides $3.5 billion in funding for extension of Section 1112 payments—appropriations available through September 30, 2021.

• Resumes the forgiveness of principal and interest (P&I) on small business loans guaranteed by the SBA under the 7(a), 504 and Microloan programs, established under Section 1112 of the CARES Act. The first 6 months of P & I will be forgiven of newly approved and funded between February 1 and September 30, 2021, capped at $9,000 per month.

• Waives SBA Guaranty Fee’s for all loans funded and closed between February 1 and September 30, 2021.

• Provides that all borrowers with qualifying loans approved by the SBA prior to the CARES Act (Pre-Cares Act-March 2020) will receive an additional three months of forgiven P & I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month.

• Provides that, after the three-month period described above, borrowers considered to be underserved—i.e., the smallest and hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month.

These include:

• Borrowers with SBA microloans or 7(a) Community Advantage loans

• Borrowers with any 7(a) or 504 loan in the hardest-hit sectors, as measured by the severity of sector-wide job losses since the start of the pandemic, including all those belong to 2- and 3-digit NAICS categories with the most severe job losses since the start of the pandemic:

• Accommodation and food services

• Arts, entertainment, and recreation

• Educational services

• Mining and logging

• Apparel and clothing accessory stores

• Sporting goods, hobby, book, and music stores

• Air transportation

• Transit and ground passenger transportation

• Scenic and sightseeing transportation

• Publishing industries, except Internet

• Motion picture and sound recording industries

• Broadcasting, except Internet

• Rental and leasing services

• Clarifies eligibility and increases program integrity:

• SBA payments should be made on any loan approved before the applicable deadline, and debt relief payments should be made only once the loan is fully disbursed.

• SBA may establish a minimum loan maturity period for each loan product covered under the section to prevent program abuse.

• Any business or applicant may only receive P&I payments for only one loan approved after CARES Act enactment.

Call us today to learn more about what this may mean for your business. The COVID Relief package has helped create a marketplace of aggressive buyers and premium business prices. Let’s discuss this today.

Tom Boyd

Sunbelt Business Advisors

The holidays provide a great time off to think about “What’s next?”

Despite all the entertaining and gift-giving and get-togethers, most of us have a lot more down time than we think. Time to consider what next year could really look like in terms of your business – and finding out what it might look like to sell it while the market is favorable.

Even better, I find myself and others in a better frame of mind; more positive, more thoughtful, and frankly more grateful. And, if you are a business owner, especially one approaching retirement age, you may be thinking about keeping your business in the year ahead or taking more time for other important things.

On Monday January 4, 2021 – business owners are back in the footrace to build business – frequently too busy to perhaps look at other options.

The Holidays, and the time off they provide, make it a great time to invest a few hours and get the facts about the business-for-sale market. Most of us spend more time than that doing things that are much less important, and when January comes and we get busy – that extra gift of time will be gone.

This Holiday Season provides a more valuable opportunity than most years because:

First, there is a surplus of qualified business buyers out there – literally. They are interested in purchasing businesses right now. It is a seller’s market.

Second, businesses are really selling at a record clip – there is an extraordinary amount of pent-up capital waiting for the right opportunity.

Third, businesses are selling at a premium – COVID 19 has created the backlog of capital and buyers that is driving demand in most industries. You can benefit from this demand!

Get the facts. A business broker can do the homework – which helps you see the options and make better decisions. Right now the market is really much better than anyone could have predicted. A business valuation would be a good thing to have going into the new year.

Another thing to keep in front of you is the fact the best time to sell a good business is when it is still a good business. I know a lot of business owners who decided to ‘keep it going’ for just one more year, thinking either that things would not change and they would continue their success, or that there was a big windfall right around the corner.

I would encourage you to take a little bit of the time you have before New Year’s and take advantage of a business value assessment. They are provided FREE and are 100% Confidential.

Speaking for Sunbelt, when business owners work with us we guarantee the best possible net return for their business.

I’m not aware of any other brokerage that will make that guarantee to a business owner.

New Year’s is coming and you’ll probably be back in the grind – building your business with your shoulder to the wheel. I hope if you decide to set aside a little time to see what your options might be, that you will get in touch with your broker with some of the extra time you have before New Year’s.

Happy and safe holidays to you.

Tom Boyd

Sunbelt Business Advisors

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