For the fully story, visit: https://www.omahadailyrecord.com/content/expertise-pays-dividends-when-buying-selling-businesses
The COVID-19 pandemic has virtually flipped the business marketplace on its head, making experience all the more important for those looking to buy or sell a small business.
David Bandars, owner of RPR Business Associates Inc., is at the ready to help guide business owners and potential buyers during times of financial uncertainty.
While he specializes in working with small businesses, Bandars completes over a dozen valuations a month for companies of all shapes and sizes all over the country.
As a member of the National Association of Certified Valuation Analysts, RPR has been working to understand the impact on the valuation process for the thousands of companies in the Omaha area affected by the pandemic.
Sandy Kasin, owner of SBA Commercial Loan Solutions, has partnered with Bandars many times over the years. While the market “is pretty well shut down,” Kasin anticipates a rapid ramp-up in sales once businesses return to their normal function.
Among so much uncertainty, business owners have a flurry of questions for their financial advisors, especially how much less their company is worth today compared to the start of the year. Bandars said businesses were recently seeing 20% to 55% value discounts.
“But that will change if we can get this economy back sooner than later,” he said.
Because of these disparities, deals are being cancelled or put on hold, causing both buyers and sellers to contemplate their next move carefully.
“I think the COVID-19 might prompt some people to sell their business that weren’t quite ready or motivated to do so,” Kasin said. “They may be tired of the fight, and I think there’ll be some great opportunities.”
On the other hand, Bandars advised sellers to be wary of the current market and to try to hold off on selling their business until the market has recovered.
“Buyers can afford to wait out this economic recession and attempt to force the seller into taking an offer that they otherwise may not have considered,” Bandars said. “We are advising our sell side clients of that and, in many cases, the seller is willing to just take the business off the market for the time being.”
Jamie Dudney, president & CEO of Arion West, has seen some deals put on hold, but not because a buyer or seller pulled out of them.
“The ones that still want to progress are on hold because the banks are so overwhelmed with the emergency financing,” Dudney said.
Some businesses categorized as essential are thriving more than ever – especially those that have been willing to get creative with their business model.
“There is a nail salon in Elkhorn that has turned the salon into a COVID-19 supply distribution center,” Dudney said. “People in our community are not going to forget them.”
Dudney has also seen several successful deals in those industries go through. HVAC, lawn care and similar businesses with limited contact with customers have stayed fruitful because of the relatively reduced risk. However, Dudney warns these businesses that their pace might slow as disposable income dries out in a struggling economy.
Experts like Bandars emphasize that right now is not a particularly advantageous time to be a buyer or a seller.
“Our country has never experienced anything like this before of this magnitude,” Bandars said. “And therefore, sometimes the best response is to just not do anything. To hold down the fort and take a ‘wait and see’ approach for a while.”
That being said, the uncertainty can also mean deals are available that wouldn’t normally be on the market.
“As a buyer, you must remember that this might just be the once in a lifetime opportunity to buy the perfect business at a much lower price than you would pay in normal economic times,” Bandars said.
Bandars advises small businesses owners to “put your foot on the gas” to ramp up new ways to produce revenue that can be immediately incorporated into their existing business model.
It’s important to always think long-term, Kasin said.
“If you can find a business that’s cash flowing now or will be as soon as the economy opens again, there’s a great opportunity,” Kasin said.
With interest rates at an all-time low, it is also an advantageous time to take advantage of small business loans and interest-free financing. Dudney said companies that aren’t willing to get creative “may not be around” when COVID-19 has loosened its grip on the country.
With so much uncertainty in our economy, now is the ideal time to speak with RPR Business Associates and explore loan options being made available during the pandemic.
For more on RPR, visit www.nebraskabizsale.com or call 402-305-6088.