To understand the percentage of businesses that create enough profit for the owner to exit or retire, the percentage of businesses that are successfully sold, and the primary reasons that owners exit (sell) their business.
We were not provided a geographic focus for this project, so we assumed a United States focus. If a more broad approach is desired, for example, a global view, this would have to be clearly communicated to us in any reply.
We were not provided what kinds of businesses to look at, so again, we are taking a broad approach and looking at all industries. We were also not informed about the size of the business (small, medium, or enterprise). We decided to focus on small businesses as there are 30.2 million small businesses in the United States and small businesses comprise 99.9% of all United States businesses. If we should not be focusing on small businesses, that should clearly be communicated to us in any reply.
However, when looking at the 2020 data, small business transactions dropped 39% in the 2nd Quarter of 2020. "This represents the largest year-over-year decline since the Great Recession, when transactions dropped 50% in the 2nd quarter of 2009." This is due to government mandated shutdowns because of COVID-19.
The good news? "In July, 71% of surveyed owners that were forced to close had resumed operations. Entrepreneurs are pivoting, adapting, and seeking opportunity amidst the disruption brought on by the pandemic, and as a result, acquisitions are steadily bouncing back from April lows."
Sixteen percent of owners plan to exit their businesses earlier and 20% plan to exit later due to the pandemic, according to this survey.
Fifty-five percent of current owners feel the time is right to get a favorable price and good value, and 42% have started or accelerated plans to purchase (vs 24% who have delayed). Thirty-eight percent of current owners are trying to fast track a business purchase by Sept 27th to take advantage of 6 months of free principal interest on SBA loans, a CARES Act benefit. Of those, 35% would pay a premium to meet this deadline. Sixty-one percent of current business owners would consider purchasing a business that has been closed by the pandemic, and 80% would consider purchasing a business that has remained open but has been negatively impacted.
Summary Of Our Early Findings Relevant To The Goals
Our initial hour of research was spent ensuring that the research questions could be answered by publicly available sources, and then providing some relevant and salient data points to set the table for future research.
There is no publicly available data surrounding the percentage of businesses that create enough profit for the owner to exit or retire. Based on this we are pivoting to another research path that will provide useful insights regarding this part of the research. (Please see scope 2).
Please select one or more of the options provided in the proposed scoping section below.
Only the project owner can select the next research path.