This isn’t the first time in the past ten months that I’ve written a forward-looking statement.
On March 16, 2020, I published my manifesto on how the global pandemic would impact the dealmaking landscape.
In that piece, I predicted interest rates would fall and availability of capital would increase.
Both did just that.
I also predicted that some businesses — the ones that embraced the power of the pivot — would massively benefit from the pandemic.
They have.
In fact, I bought one that pivoted from supplying signs and displays like menu boards to the hospitality sector, to producing COVID-19 signage instead. The business almost doubled in size between April and October year on year.
And November, I published my two-part State of the Dealmaking Nation.
State of the Dealmaking Nation, Part 1
State of the Dealmaking Nation, Part 2
The key takeaways are:
There are more sellers and more financing. You will have multiple options to finance a closing payment.
All you need to do is FIND the right deals for YOU.
Now that we’re are at the start of a new year, has anything changed… and what can you expect for 2021?
Firstly, January is always a big time for dealmaking. Outside of all the geopolitical issues I will cover shortly — outside of anything major going on in the world — January always remains a good time to source and close deals.
Why? It’s all about seller psychology.
You may have noticed a slowdown in deal activity in December? Sellers are busy wrapping up the year’s activity and preparing for the holiday season. In general, December is a happy, distracted time… so seller distress wanes and that impacts deals coming to market.
January is a completely different story, however. The holidays are over and many people (not just sellers) get the post season blues.
That permeates small business owners in a big way. It’s cold, dark, wet (in most places) and going back into a small business in January can cause a lot of reflection.
Is this the year I sell? Can I seriously work in my business again all year?
These thoughts will be compounded in 2021 given the major geopolitical issues facing our world, namely:
Depending on where you are in the world, COVID-19 is impacting us in different ways. In the U.K., we are bang in the middle of the second wave that’s worse than the first.
We recently entered another full-scale lockdown (our third since the pandemic started), and it’s causing major issues in hospitality, travel and brick and mortar retail.
Then it seemed like the U.K. wouldn’t have a Brexit deal before the end of the year. Thankfully, a deal was agreed to right before Christmas.
The U.K. then signed a £660 billion annual trade deal with the EU. Even though trading with the EU will involve more administration and slightly higher related costs, U.K. small businesses are free to continue to export without extensive tariffs and other costs.
Across the pond, COVID cases are also spiking and the U.S. political climate is causing great unrest.
Last week, protestors stormed the Capitol Building in Washington D.C. and people are calling for President Trump to be removed from office prior to president-elect Biden’s inauguration on January 20.
I can confidently tell you that ALL of these geo-political and macro-economic issues create ONE thing for business owners…
UNCERTAINTY.
And uncertainty is a MAJOR reason business owners decide to sell.
We saw this after the 9/11 terrorist attacks and the global financial crisis in 2008.
Small businesses survived; some even thrived. But the underlying environment was such that many business owners decided it was “time.”
Those events were catalysts — moments used to reflect and weigh the options. Decide to move on. Retire or take on another opportunity.
Whether you are in the U.S. or U.K. — or are experiencing ripple effects in Australia, Canada and other western economies — the start of 2021 is a major time for reflection.
Basic business economics still ring true. No matter what is happening in the world, businesses — and more importantly their owners — can thrive if they PIVOT.
Business is a zero-sum game. Though different trends are sweeping different countries and markets, businesses and consumers are STILL spending. It’s the routes to market and business models that are changing.
To win (and win big), all you need to do is:
Think of engineering businesses that ditched manufacturing car components in favor of medical devices.
Or of a transport firms that are now delivering vaccines to local medical centers.
Or retailers who went 100% online and will never go back to having physical locations.
I could go on and on.
As a dealmaker, your marching orders have not changed from late 2020.
Find as many deals as you can — but stay away from hospitality, travel and site-based retail for now.
Hone in on construction, haulage, supply chain distribution, professional services, technology, online retail, and IT services and support.
Find businesses that can pivot with an owner that either doesn’t want to or doesn’t know how to.
Then ride the wave.
Until next time, bye for now.
