Some people are looking to the new year as some kind of meaningful break with 2020, as if viruses or world events pay attention to a calendar and begin or cease based on what we call a “new year.” Unfortunately, that’s simply not the case. We’ve seen a lot in our time as brokers, but 2020 has been one for the books. But, we’ve also learned a lot, and we want to share some of those thoughts with you in these final weeks of 2020.
We talked about financial implications for business sales in an election year back in January. It seems as though there may be some change coming, though it is unclear how soon that will happen, as legislation needs to pass through the House and Senate before landing on the President’s desk, and as of right now, the makeup of the Senate is still undecided. Any other year that might be crazy, but in 2020, it registers as just above ho-hum.
Takeaway: The uncertainty about the election is now over. The uncertainty about what comes next will now commence.
We told you all about PPP when it was first widely available and then we wrote about PPP forgiveness when it recently started to happen. While the question of PPP loans on the books were holding up deals both because buyers were concerned about the status of the loans and banks were unsure how to classify “possibly forgivable” loans, that’s going to be less and less of an issue as more loans start to move through the forgiveness cycle.
Takeaway: The uncertainty about the status of PPP loans is mostly over. But there’s uncertainty as to whether there will be additional support or loans in the new year with a new Congress.
The Markets and Banks
The markets have reacted unusually, to say the least, this year, both at home and abroad. Even as trillions of dollars were added to the national debt, the markets acted bullish at times. Banks, as we might have expected, got more cautious and started asking questions we had not seen before.
Takeaway: It has not yet been a full calendar year since the shutdowns began. When businesses are able to start comparing month-to-month starting in March 2021, the markets are bound to react.
So, as we can from the examples above, 2021 will change nothing in terms of certainty. Indeed, business, like life, is filled with uncertainty. Every other year we have sold businesses we’ve never made guarantees, and this year is no different. You can buy a healthy business, and through your own bad practices, run into the ground. We’ve seen it. You can buy an ailing or average business, and build it up. We’ve seen that too.
In 1939, no one was saying, “Well, let’s wait until 1940 to see how things go.” We have no idea how things may go with Covid-19, or whatever other diseases or disasters may be looming out there for the human race. But while we know life may seem to slow down during national and international crises, yet it must go on. You have to ask yourself how long you are willing to put your life on hold in exchange for more certainty, which cannot offer you any guarantees anyway. And if there is no more certainty one year from now, you will have lost a year that you could have used to buy and build a business, or sell a business and enjoy the rewards.
We don’t have all the answers, but 2020 has simply reminded us of what we’ve always known: in troubled waters, we have to keep rowing while keeping to our principles and adhering to our compasses as best we can. We are here to help you do the same.