Buyer's Market

March 12, 2020

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Florida, USA

The impending recession illustrates that the buyers market is fast approaching. I am personally accelerating my search to track and acquire a great business in this timeframe as valuations decline and the number of businesses for sale increase. What are your thoughts?

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Reply by a lender
from University of Missouri in St. Louis, MO, USA

One banker's unofficial perspective; Leverage is more important now than ever in acquisitions. You might catch the one off seller who panics and sells below value but my guess would be that business had other issues they were trying to minimize or sell before they came to the surface. Stick to your fundamentals. High leverage, tight cash flow deals dependent on heavy addbacks were always risky. Good companies with strong fundamentals and good staff/customer bases should rebound (assuming things play out well in the next###-###-#### days). I have yet to hear about any pullbacks in lending but that could occur if this keeps going for awhile. It would be naïve to think this won't have a big impact on every sector in the next several months. Supply chain will likely be an issue and the service sector will likely feel that at some point based on at least a short term basis. Our capital market team puts out a newsletter every couple of months. I imagine the next one will be a good read. If you would like to be added to the distribution list just email me. redacted

Reply by a professional
from University of Southern California in North Palm Beach, FL, USA

It's a complete waste of time to stay up all night worrying about these topics. Good deals are made no matter what the external or internal circumstances, or you name it. Learn how successful and profitable dealmakers source and do deals; don't waste time listening to people trying to find deals who don't complete worthwhile deals. Business school thinking needs to be left at business school.

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