Labor Force Impact on Business Sales
Posted by Jennifer Smith on
It’s no secret that businesses are having labor troubles. Everyone is hiring. Hourly wages are going up. Restaurants are reducing hours and days of operation. Supply chains are interrupted. It’s EVERYWHERE.
If you own a business, this might be what is driving you to consider selling. Or perhaps you were considering selling anyway and you want to know what impact this particular dynamic is having on sale prices. Well, third quarter statistics are out, and closed transactions are up 17% over the previous quarter and 11% year over year.1
This tracks with conversations that we’re having with buyers and sellers. At Murphy Business of Cape, we’re having our best year ever and that’s great for buyers and sellers. Financials have largely rebounded and seller confidence is much higher than it has been. While labor is certainly an issue, many are finding ways to leverage technology and do business in a less labor-intensive way. They are also making price adjustments that translate into increased revenue to offset increased labor expenses. It seems that if a business survived the global pandemic, it’s proving to be more resilient and nimble when it comes to labor concerns today.
Buyer demand remains high and there are too many buyers chasing too few sellers. This is resulting in more offers for higher values; it’s a seller’s market. From conversations with buyers, we know there is a lot of pent-up demand from 2020 as well as “corporate refugees” who want to be more in control of their professional futures.
So what is hot right now?
- Steady or increasing revenue that either stayed the course in 2020 or bounced back well in 2021.
- A strong digital presence with an increased utilization of technology.
- “Essential businesses” that will remain open if we have another global shut down.
- A dedicated employee base with low turnover.
- Businesses small enough to fly under the “mandate radar”.
If you are considering selling in the near future, we recommend starting the conversation with us now. We have ready, willing, and able buyers with financing at historical lows. As we get into 2022 and beyond this balance may shift and, as our seller inventory goes up, sale prices may come down. Contact us today for a confidential conversation.