Buying or selling a business has its own peaks and pinnacles at any given time, however, navigating a business sale transaction during an election year is a unique playing field. Although the political climate can significantly impact business brokerage sales, it doesn't solely bring challenges; there are also potential benefits to consider. Here are some pros and cons of navigating a business sale during an election year:
Negative impacts election year may have on business sale transactions:
Market Uncertainty - Election year typically introduces uncertainty regarding economic policies, causing buyer hesitation. Predicted changes in tax regulations, compliance requirements, and the overall economic climate may prompt buyers to postpone transactions until after the election, thus creating obstacles for sellers in closing a business sale.
Shifting Business Valuations – Uncertainty surrounding election outcomes can trigger negative effects on business valuations. Business sellers may have a difficult time justifying their asking prices in an uncertain market. Being aware of that, buyers may be using that to their advantage, looking for a bargain where there normally may not be one.
Financing Challenges - Elections can influence lending practices. Banks and financial institutions may tighten lending criteria due to perceived risk, impacting buyers’ ability to secure financing, which in turn would make it a challenge for sellers, too. Business sellers may want to consider offering seller financing as a strategic solution to address this potential problem.
Positive Effects Election Year may have on business sale transactions:
Motivated Buyers and Sellers – Like stated above, election year can bring hesitation for business buyers and sellers; but what’s also true is it can motivate both parties to bump up their business sale transaction timelines. Many sellers and buyers may be looking to finalize their sale or purchase before a potential change in office takes place, which can be of mutual benefit.
Interest in Pro-Business Policies – Elections can bring hope - and if candidates with pro-business platforms gain traction, it can boost buyer and seller confidence. A positive outlook on the economy can drive investments, leading to increased demand for businesses across various sectors.
Community Engagement and Networking – During times of uncertainty, it’s common for communities, especially small business communities, to come together and support one another. Business buyers and sellers can capitalize on networking opportunities during local events or town halls, and build relationships that my lead to business acquisition or sale prospects.
Although an election year may bring about certain challenges, they also offer valuable opportunities for business brokerage sales. For business sellers and buyers alike, understanding these factors and being armed with the knowledge and resources to navigate the business sale accordingly can lead to successful outcomes for all.
Contact our team at Transworld Business Advisors of Boston to learn more about navigating the business sale transaction.
