Retail Observer

RETAILOBSERVER.COM FEBRUARY 2024 64 A s business owners in the appliance service industry begin to think of retirement, there will also likely be concerns over what might happen to the businesses they've developed over many years of hard work. While some may simply close down, or perhaps be handed off to an existing employee or family member, an increasing number are being sold to others interested in either entering the industry, or expanding a current business. One of our PSA members who's a leader in this segment of the industry shared the following information. If a sale of your business is something you might be considering, it's important information for you. A market update for small business owners, especially appliance service companies is available through Sun Belt Re-Salers, specialists in assisting with sales of companies in our industry. For anyone looking to sell their business in 2024, this is very valuable information. According to BizBuySell.com, the largest online business-for-sale exchange website, business transactions in Q2 of 2023 saw an 8% increase over Q1. This marked the second consecutive quarter since Q4 of 2022 that small business transactions have risen. We believe this tells us buyers are realizating that interest rates aren't coming down any time soon, and they're now moving forward with their business purchase plans. (See the Bizbuysell chart.) On the flipside, median sales prices have slid a little in 2023 compared to 2022 levels. So, what does this mean for business owners contemplating the sale of their business? While it's easy to focus on the decrease in median sales price and conclude that the current resales market isn't conducive to maximizing value, industry experts have discussed alternate explanations for these sales trends. For many business owners, 2022's rising capital costs and inflation hurt their bottom lines. Thus the multiple of earnings being paid at close did not move – there was just less owner benefit. BizBuySell's Q2 report also surmised that declining sales prices are "more indicative of owners or their business brokers flexing creativity in deal structure to accommodate impacted purchase power." To be clear, being flexible does NOT mean sellers need to take less. Instead, being open to creative ways to close the gap (e.g., seller financing, real estate) and help alleviate some of the initial financial burden has become increasingly necessary for owners looking to earn maximum value for their business. Ultimately, regardless of economic conditions, buyers in the marketplace continue to have a significant interest in investing in good businesses. While the rising cost of capital has made it more difficult to secure traditional financing, buyers are still willing to pay a premium provided the business is priced appropriately and the seller is flexible with how the deal is structured. Owners who are contemplating the sale of their business now or in the near future and are interested in learning how they can help maximize value should feel free to contact Terry Kelm at Sun Belt Franchise Re-Sales, 888-484-0332 or terry.kelm@sfrresales.com. S E R V I C E D E P A R T M E N T Randy Carney – PSA Executive Director Terry Kelm – SunBelt Franchise Re-Sales THE CURRENT STATE OF SMALL BUSINESS SALES RO

• Cover