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About the podcast: 

The "Paychex THRIVE Business Podcast" offers timely insights from industry leaders, policy experts, and newsmakers on current marketplace conditions, new legislation, and innovations impacting businesses. Hosted by Gene Marks, a trusted authority on small businesses, the podcast aims to help entrepreneurs and business owners tackle big challenges, propel their businesses forward, and thrive in today's competitive landscape.

About The Guest(s):

Bob House is the President of BizBuySell, a leading online marketplace for buying and selling businesses. With over 11 years of experience in the industry, Bob has been instrumental in growing BizBuySell and its sister sites, BizQuest and LoopNet, into the largest network of business-for-sale marketplaces in the United States.

Summary:

Bob House, President of BizBuySell, discusses the state of the M&A marketplace and the trends in buying and selling businesses. He highlights the impact of the pandemic on the market, the rise of seller financing, and the increasing interest in entrepreneurship through acquisition. Bob also shares insights on the silver tsunami of retiring baby boomers and the opportunities it presents for both buyers and sellers. He emphasizes the importance of thorough research and due diligence when buying a business and the benefits of working with a business broker.

Key Takeaways:

• The M&A marketplace is rebounding from the pandemic, with transaction volume almost back to pre-pandemic levels.
• Rising interest rates are affecting sale prices, leading to more creative deal financing options such as seller financing.
• Retiring baby boomers are not only selling their businesses but also buying new ones to stay active and pursue new opportunities.
• Restaurants and service businesses are experiencing increased demand and higher multiples in the market.
• Buying a business can be a safer route to entrepreneurship than starting from scratch, as it provides an established customer base and revenue stream.

Quotes:

• "A lot of these boomers are also buyers of businesses as well. They may have exited one business, or they may have just retired from corporate life, but feel like they want to keep active, or busy, or there's an opportunity to do something for the next decade." - Bob House
• "Seller financing becomes a bigger part of the deal. Most buyers, 70%, according to our survey, say that they're gonna ask for seller financing, and 55% of 'em say it's very important." - Bob House
• "Your chances of success taking over something that's already got customers, and revenue, and profit, trained employees and all that, and building on it is much greater than starting from scratch where nobody knows about you." - Bob House

Article:

How2Exit.com Reviews: The Latest Episode of "Paychex THRIVE Podcast" on The State of the M&A Marketplace

In a recent episode of the "Paychex THRIVE Podcast," host Gene Marks sat down with Bob House, the president of BizBuySell, to discuss the current state of the Mergers and Acquisitions (M&A) marketplace. For those unfamiliar, BizBuySell is a leading online platform for buying and selling businesses, boasting over 65,000 active listings and attracting 4 million monthly visits. The episode delves into the trends and challenges shaping the M&A landscape, offering valuable insights for entrepreneurs, business owners, and brokers alike.

The Pandemic's Aftermath

The episode kicks off by addressing the elephant in the room—the COVID-19 pandemic. While the pandemic initially led to a downturn in M&A activities, the market has shown resilience. According to House, transaction volumes have almost returned to pre-pandemic levels, with an 8% increase in the most recent quarter alone. This upward trend indicates a recovering marketplace, which is good news for both buyers and sellers.

The Rising Tide of Capital Costs

One of the hurdles currently faced by prospective buyers is the increasing cost of capital. With interest rates on the rise, financing a business acquisition has become a pricier affair. This has consequently led to a slight dip in sale prices, as buyers now require more upfront capital. House elaborates that this trend is causing buyers to be more cautious, often necessitating larger down payments.

The Role of Seller Financing

To navigate the choppy waters of rising capital costs, many buyers are opting for seller financing. This approach allows buyers to make payments directly to the seller over an agreed period, thus bypassing traditional bank financing. House points out that 70% of buyers on BizBuySell are considering this option, and 55% deem it crucial. Seller financing not only facilitates the transaction but can also benefit sellers by potentially increasing the overall sale price and providing a steady income stream.

The "Silver Tsunami" Effect

Another intriguing point discussed in the episode is the impact of the aging population of business owners, often dubbed the "silver tsunami." With the average age of a small business owner in the U.S. being 55, many are eyeing retirement or a transition. House predicts that this demographic shift will lead to an influx of businesses entering the market over the next decade.

The Allure of Entrepreneurship through Acquisition

The episode also highlights a growing trend among younger entrepreneurs—buying an existing business instead of starting one from scratch. House argues that taking over an established business offers a higher likelihood of success, given the existing customer base, revenue streams, and trained staff.

Industry Hotspots and Future Outlook

Restaurants and service businesses are currently the darlings of the M&A world, according to House. The former has shown remarkable resilience post-pandemic, while the latter is favored for its recurring revenue streams. Looking ahead, the M&A market is poised for growth, influenced by factors like the rising cost of capital, the aging business owner population, and the increasing professionalism within the industry.

Final Thoughts

The episode serves as a comprehensive guide to the evolving M&A marketplace. From the impact of the pandemic to the challenges and opportunities that lie ahead, it offers a 360-degree view that is invaluable for anyone involved in buying or selling a business. As the M&A landscape continues to shift, staying informed and adaptable is more crucial than ever.

So, whether you're an entrepreneur looking to make your first acquisition or a seasoned business owner contemplating an exit, this episode of the "Paychex THRIVE Podcast" is a must-listen.

Watch it here: https://youtu.be/fi1v-8XSocw?si=z6VeHWwyDGeQZg7d 

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