If you live in Cincinnati, Boise, or Omaha and have sold a home recently, I don’t have to tell you that you are in the top three fastest home sale markets in the United States.1
As a potential seller, it is welcome news that buyers are out there and ready for a new home. In fact, homes in those top three markets are averaging just 19 days before an offer.1 In this market is seems easy to get an offer. But not all offers are created equally.
As someone who recently sold his home, it’s my opinion that it takes some time to get that home ready for sale: finding an agent, decluttering, repairs, painting, getting photos taken, and getting the home listed. The list of things to do is seemingly endless. In any market, getting a good offer takes more work.
I believe the RIGHT offer is the hardest type of offer to get. It takes making the right decision at the right time and working with the right agent. Is the closing date going to work? Is the offer all cash? What changes do the buyers want first? What concessions do I need to make?
It’s my opinion that the M&A activity in the fourth quarter of 2020 and heading into 20212 feels a lot like the real estate market in Cincinnati.
There is pent-up seller interest, business models normalizing after being impacted negatively in Q2-Q3, valuations peaking upward, and Private Equity groups and deal sponsors sitting on capital that they want to put to work.2
If you’re a business owner and noticing this “frothiness” right now in the market; perhaps you are wondering what this market dynamic – post-pandemic, high valuations, potential tax law changes – means for you. We believe you are not alone.
The process of selling your home and selling your business is very similar – albeit one is likely a much larger decision.
Decision
Before you sell a house, you will likely have a decision about where you will live next. When you are selling your business, you may discuss with your family, your Board, your friends, and your advisors where are you going to “live” post transaction. You may ask yourself questions like:
- Do you want to be on the beach?
- Stay in the business?
- Buy another business?
Advisor
After you make the decision to sell your house, you may consider hiring a real estate agent. When it comes to your business, you may consider interviewing advisors then may decide to hire one. While we believe we offer value to our clients, sometimes there are better fits. Explore all your options. Don’t go at such a large decision alone.
Inside Scoop- Consider asking an advisor questions about their history, process, and references. I would also suggest asking accountants, lawyers, and intermediaries that you interview who they recommend, other than themselves.
Preparing
You’ve been living in that house for a while, before you show it you need to consider getting it ready to show. The same may be true for your business. Work with your transaction advisor to prepare your business for sale. Your advisor may start by working with you to review financial statements, collect document history, assess future management team prospects, and highlight value drivers.
Listing!
You’ve decided, selected, and cleaned. It’s time to put your agent to work by listing your home and marketing it. The same goes for your business. At RKCA, we dedicate a team of Partners, Vice Presidents, Associates and Analysts to understanding your business, identifying buyers, marketing the business, and working with you to evaluate your options. We also help lead management meetings and tough negotiations to get you to the deal that best aligns with your goals.
Like a great real estate agent fights for the right offer for your home, at RKCA, our purpose statement for our clients is “A life’s work, realized.”
If you, or someone in your network is looking to realize their life’s work, send me an email at nursic@rkca.com.
Sources:
1. Re/Max Market Research report Source: https://www.bizjournals.com/cincinnati/news/2021/02/19/cincinnati-drops-a-spot-among-nations-hottest.html
2. GF Data February 2021 M&A Report
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