Strategy in an uncertain economy??

by a searcher from Brigham Young University

1 year ago

Recently had a talk with a business school professor about the SMB acquisitions market today and general uncertainty in the US and word economic environments. I’m curious how everyone is preparing/looking ahead over the next 2-4 years. 

Searchers how are you adjusting your search given the uncertainty, if at all?

Operators how are you preparing your business to weather storms? Specifically curious for those that have SBA loans currently. 

2 likes
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14 comments

searcher from The University of Michigan - Stephen M. Ross School of Business

As an owner with SBA debt, I've been aggressively paying down my debt as interest rates increase. I'm also building up cash reserves and have set up a line of credit just in case. If you've been thinking about getting a LOC, now is the time to do it because it'll be a lot easier to get when you don't need it than when you do. Look at your highest expenses and figure out how you can reduce them. As Tom said, you need to cut expenses before cash becomes an issue. That is a difficult decision to make, and you need to be prepared to make it before it's too late.

As for searchers, based on the conversations I've had with business owners I know that have been considering selling, I think you'll see deal flow slow down. Unless owners have to sell, they are most likely going to wait out the poor market conditions and sell at a higher valuation in a few years.

1 year ago | like reply | 0 likes

searcher from University of Florida

Is it reasonable to expect fewer businesses to be made available for sale? Or will it be a similar number, but simply with lower prices to account for the higher cost of debt? How should buyer be thinking about changes in dealflow?

1 year ago | like reply | 0 likes

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