2020 Forecast

2019 is in the books. In general, people are feeling pretty good right now. The S&P 500 was up 28.9% and the Nasdaq was up 35.2%. Unemployment is crazy low at 3.5%, optimism is high, and although there has been lots of turmoil nationally and globally, it has mostly impacted a few specific sectors. A recent University of Michigan survey found that Americans’ confidence they’ll have adequate income in retirement is at a 20-year high, while CNN Money’s Fear & Greed Index hit 96 out of 100, “extreme greed” (at this time last year it was 12, “extreme fear”). So, what does that look like for our clients that want to buy or sell a business this year? Good question!

Sellers are struggling with “riding the wave” vs. “getting out while the gettin’ is good”. Our advice is to not wait until things start heading south to sell. If right now you have a track record that shows good earnings and a solid outlook, let a buyer take over and implement new strategies that might help insulate the business a bit when things get leaner. We’re seeing a lot of buyers expanding profit margins through innovative marketing, expanding channels, and streamlining operations (things many sellers don’t have the energy or the know-how to pull off). Buyers can also leverage 3-6% money right now, so if you’re on the fence, consider cashing out while your business is strong and let a buyer take it to the next level.

Buyers: If you just made 30% on your portfolio, had a big inheritance hit, or just want to take advantage of historically low interest rates…now would be a good time to expand or invest in your dream of business ownership. Keep an eye on the election as that will have a pretty big impact on the outlook for 2021 and beyond, but if you buy and do the hard work in 2020, even that won’t be as much of a wild card.

Overall, we don’t think we’re in for a recession in 2020 because of the election cycle. Trump simply won’t allow it. The Fed will likely stay on the sidelines. We’re likely to see new highs in the stock market in 2020, but that makes a correction even more likely post-election. Speaking of the election…I have no prediction on that. Coin toss, anyone?

In summary, 2020 will be a great year for a business transfer. If you are interested in buying or selling, please contact us for a free confidential conversation.