In lieu of our usual collaborative Q3 report, our Managing Partner Max Friar sat down with colleague and longtime friend Andrew Longcore for a Q&A on what he’s been seeing in the Q3 business market. Andrew has unique experience as both a transaction attorney and M&A advisor facilitating deals.
Max: How are owners/sellers feeling right now? What are the reasons behind these feelings?
Andrew: The M&A market is extremely active right now. There seems to be an increase in burnout or looking for a change in life. The pandemic has caused a lot of uncertainty and caused others to reevaluate their priorities. I do anticipate a tipping point coming. I do not know when but with the number of business owners that are experiencing burnout, that are nearing (or are past) retirement age, and the number of distressed businesses surviving on government subsidies, I expect to see the number of businesses available to be bought on the rise.
Max: Are there any themes driving buyer interest/activity? For example, low interest rates, SBA incentives?
Andrew: Each buyer is unique but for individual buyers, I believe there is a growing desire to take control of their professional life and not rely on an employer.
Max: What industries appear to be the most popular/active right now? Has there been a shift since last quarter in this respect? For example, are you seeing more construction transactions and fewer retail transactions?
Andrew: Construction trades and industrial (and industrial suppliers) do seem to be more active. I believe it is probably related to the amount of demand the economy has on those businesses at this time. It is easier for buyers to see more security in the cash flow in the near future.
Max: If you could communicate one thing to buyers en masse, what would it be?
Andrew: Connect with an M&A advisor early in the process. It is too often that a buyer has not fully thought through their offer or the letter of intent is missing important terms that should be agreed upon before proceeding forward.