How does the softening economy affect business brokerage?

With the economy softening, you would think that business would be slowing down.

What I have noticed for the last few months is that there are fewer buyers calling; however, those who are looking at businesses are dead serious. The buyers know what they are looking for, or at least the criteria for the business. They are able to evaluate the Confidential Business Review or Offering Memorandum and move towards a Letter of Intent (LOI) in a timely manner.

The selling market is still strong.

Seller's want to take advantage of the low capital gains treatment on the sale of their company before the new administration plans to raise them. They also know that there will be a glut of available businesses on the market and a downward price pressure in the next few years. They would rather sell before it becomes more difficult to compete with so many others.

There is a Private Equity Boom happening as well.

The interest level of private equity funds in middle-market companies is still very strong. More players and abundance of capital continue to fuel the growth. For smaller private companies, private equity funds can deliver much needed financial resources such as liquidity, growth or acquisition capital, and greater access to lender markets. They can also provide liquidity for companies that are turning the business over to their children or a change of ownership.

Ultimately, for those thinking about selling their business, there is no time like the present before there is too much competition in the marketplace.