Global Political Concerns And Buying A Business
If you listen to news outlets and read articles from across the political landscape, it would be easy to believe that the world is about to end.
This is not simply in the U.S. but rather on a global basis. I am not going to regurgitate the issues – they’re too numerous, but it would be very easy for a prospective business buyer to themselves that now is definitely not the right time to buy a business.
Instead, they may be thinking it is prudent to let the situations play out, see what potential repercussions materialize, and once the dust settles, they can decide the best course of action.
While caution and skepticism are always good traits for a business buyer, I do not buy into the “wait and see” argument.
To me, that is simply another term for procrastination.
The reality is that regardless of what happens on the political side or with other global events, the world shall carry on, the sun will rise tomorrow, and without a doubt, business will continue to be conducted.
Obviously, if you are considering a business whose revenues are closely tied to government policies or contracts (i.e. road construction contracts, government covered healthcare, etc.) and there are threats to those sectors under a new regime, then yes, it may make sense to hold off. Alternatively, any deal can be contingent upon the continuity of certain policies in order to ensure the sustainability of the business.
Now for the REAL opportunity!
Upheaval, fear and uncertainty are fantastic environments for buyers.
I have done some of the most lucrative deals at the exact time when most buyers were heading for the hills. I did this during the Internet bubble, again right after 9/11, and a third time during the housing and Lehman Brothers collapses.
In all of these instances prospective buyers wanted no part of a potential investment and best of all, sellers panicked thinking they would have to ride out the storm for who knows how many years before they could exit their business. In all cases, I was able to negotiate purchase prices and deal terms that were simply irresistible.
Of course, the paramount criteria was to be sure the businesses I bought had a solid track record in sustainable sectors that would still have demand for its products or services after any potential down period. In all cases, that is exactly what materialized and within a very short period, the value of the businesses grew exponentially and I sold all of them for substantially more than I paid.
The lesson is very simple. Uncertainty and risk have to always be major concerns for a business buyer. But, when the business for sale market gets jittery, opportunities abound. However,
if you stand on the sidelines waiting for political results to dictate whether or not to buy a business, you will probably be standing for a very long time and will likely never pull the trigger.