Read the Facts
We’ve been sharing opinions from a variety of sources (including our own) about the likely impact of COVID-19 on the market for buying and selling landscaping companies. Now we’ve just received some factual information for Q1-2020 in The MarketPulse Report*. Here are a few facts from the report as you consider your options for selling (or buying).
- Just under half of deals in process were delayed, 11% were cancelled and the rest were unaffected.
- Deals were cancelled mostly by buyers (50%), but sellers and banks also cancelled deals in progress.
- Businesses were/are busy keeping their businesses operating (if possible) and “reinventing” themselves for greater effectiveness as we emerge from this environment.
- Closings are estimated to be delayed by at least 90 days.
- Seller market sentiment dropped in all sectors but some of that was already built into buyers’ anticipating an inevitable pull-back from the market highs.
Since landscaping is an essential service, buyer interest has continued to be strong. We receive inquiries from active buyers who want to add landscaping companies as part of their strategic growth plan and from private equity buyers who invest in businesses for attractive returns. For smaller companies, buyers seeking greater control in their future (who may have lost their jobs in the pandemic) will be looking for an essential business to buy.
The days of all-cash payouts are probably over for now. On the upside, buyers will offer earnouts, contingent payments and/or seller notes that share the risk and rewards of achieving targets for the business in the uncertain future.
Are you are thinking of selling? What’s your next step? Get a look at your business through a buyer’s lens. Find out whether the terms and price you want are achievable. If not now, what do you need to do to get there.
How do you get that look? Start by calling or emailing me for a confidential initial discussion on a complimentary basis. Alison at 224-688-8838 or email at [email protected].
*Quarterly IBBA and M&A Source Market Pulse Survey provides an insight into the market conditions for businesses being sold in Main Street (values $0-$2MM) and lower middle market (values $2MM – $50 MM). The survey is supported by the Pepperdine Private Capital Markets Project and Pepperdine Graziado Business School. Q1 2020 survey was conducted April 1-15, 2020 and was completed by 416 business brokers and advisors. Participants completed 296 transactions in the quarter.