Is Covid-19 a good time to buy a business?
The business sale market has inevitably faced a downturn in interest and demand as a result of the coronavirus pandemic. As selected sectors have suffered serious financial blows, such as the aviation, automotive, media and travel & tourism industries, many have found new ways to attract customers throughout this period of uncertainty.
During this unprecedented trading period, the housing sector was subject to a two-month shutdown, resulting in an overwhelming surge of interest once the market reopened. Measures were immediately put in place, such as virtual viewings and automatic affordability checks to encourage homebuyers to return to the marketplace and understand finance eligibility. As consumer demand resumes and the economy adapts to a trading climate overshadowed by Covid-19, we assess why now could be a lucrative time to buy a business.
Covid-19 uncertainty and unprecedented trading conditions
Responding to market uncertainty, many business owners originally on the fence about selling their businesses may have passed this hurdle. Business owners are looking to shed high-risk businesses during this period before they develop into a liability, in particular, if the business has a gleaming financial track record. While the financial health of their business remains unaffected by the effects of the virus, the likelihood of the business selling at its current state for a competitive price is higher.
As a result, business owners currently selling shop may be looking for a quick sale, making it the prime time to buy a business cost-effectively. As businesses may require more capital to weather the coronavirus storm, this may be an ideal time for business owners to source a buyer with more investment potential and capital. Many buyers are currently using cash tucked away to take advantage of the opportunities presented as a result of the pandemic, showing a real appetite to buy. The timing may mean you can negotiate better deals as there’s more room for movement on the asking price, helping you achieve your growth vision cost-effectively.
Is the timing right for the birth of an innovative business?
During the pandemic, consumers are likely to be captured by innovation as during this period of social nervousness, an innovative business can inspire consumers and directly connect with the target audience. If you have a business plan for which the ideal launch time is amid the pandemic, buying a business to establish a selling platform could be a cost-effective way to build your brand. For example, if you’re a locally established maker of face masks, your peak trading season would be during the coronavirus outbreak, making this the ideal time to establish a channel through which you can deliver your products.
Government initiatives to kick-start UK economy
The UK government are committed to restarting the UK economy following the lockdown slowdown, making this the ideal time to access business finance; however, eligibility may be restricted. In a bid to kick start the economy and to provide a stepping stone for businesses, there are numerous avenues available to protect businesses from experiencing financial distress. While this may provide enough funds for business owners to bide their time, some may be left with no option but to sell, making this an ideal time to purchase. Due to the pandemic, market competition may be lower than usual which could mean that there’s less of a chance of entering into a bidding war.
If you’re considering buying a business, the Selling My Business team can offer access to a vast portfolio of businesses up for sale from a variety of sectors. If you’re looking to make a quick purchase, the SMB team can also direct you to our range of franchise opportunities. As franchises are established businesses, this may be an ideal time to buy a turn-key business to reduce the hassle of raising start-up costs and building the business from scratch. If you’re interested in our range of businesses or to register as an actively interested buyer, get in contact with the Selling My Business team.
