Every entrepreneur recognizes that there are risks in buying and selling businesses. These risks are mainly financial, meaning some entrepreneurs can and will take bigger gambles than others do.
But no matter how comfortable you are with taking chances as a buyer or seller, it is still critical to reduce unknown elements and potential consequences you may be facing. Familiarizing yourself with the current transactional landscape is one way to understand and anticipate what you could be getting into.
What do buyers and sellers look like right now?
For example, buying or selling a business right now can involve unique components specific to the unprecedented times in which we are living. People are selling a company they never expected to sell because of pandemic-related restrictions; some buyers are shifting their interests away from certain types of industries, like restaurants.
More specifically, and as this article notes in more detail, sellers today can be:
- Filled with angst
- Regretting that they did not sell sooner
- Highly unsure of how much their business is worth now or in the coming years
- Motivated to sell quickly
- Willing to sell to parties they may not have considered under normal circumstances
On the other hand, people who are in a position to buy today may be:
- More motivated to buy competitors or diversify
- Especially interested in a business's technological capabilities and assets
- Looking for franchising opportunities
- Particularly focused on essential industries and enterprises
Taking risks does not mean flying blind
Understanding the position sellers may be in and potential buyers' goals can help both sides develop strategies to bolster their position. And without this awareness of how today's climate is affecting the business landscape, you could wind up taking unnecessary – and expensive – risks.
Regardless of how comfortable you are with taking chances as a business owner, minimizing the unpredictability of buying or selling a business is typically critical. This means conducting due diligence and arming yourself with information before agreeing to anything. It also means taking into account the current environment and acknowledging the unique advantages or disadvantages that can affect any transaction.