Fiscal Cliff Resolved…Now What?

We’ve learned over the years that holidays are a time for many companies to take a step back and reflect. Many use this time to formulate new plans, budgets and human resource allocations for the upcoming year.

“The same principles apply to us as an M&A and business brokerage firm,” says Achim Neumann, President of A Neumann & Associates, LLC, New Jersey. “However, we have the distinct advantage of speaking with hundreds of business owners during this period, giving us unique insight into their expectations and thinking for the upcoming year.”

In any given month, the A Neumann & Associates professionals interact with anywhere from 500 to 1,500 business owners along the vital New York to Washington DC corridor. Recently the company opened its fifth field office, which will be managed by newly appointed Director, Marketing, Southeast PA and Northern DE, Michael Feite. The company provides professional business services from Southern New York State to Northern Maryland and Delaware.

So, is there a common theme we hear echoed among business owners?

‘Guarded optimism’ seems to be a fair description of the general expectations. Most business owners are relieved about avoiding the infamous fiscal cliff—while recognizing the continued challenges ahead—and have reconciled themselves to the fact that the new healthcare regulations will be coming into effect. A considerable regional challenge continues to be the rebuilding that must take place as a result of Superstorm Sandy, particularly for the New Jersey shore counties. As an example, a business owner located on a major highway leading to the beaches explained that she lost 75% of her customers, “because nobody lives there anymore,” even though her business plant was not directly impacted.

“We feel that this ‘guarded optimism’ will gain momentum as the year progresses” says Neumann. “We have seen numerous leading indicators pointing up in our business, for example, valuations.” Valuations very often indicate a business owner’s desire to transfer company ownership, and with over 30 companies undergoing a valuation at this time, there is most certainly an uptick compared to 2012.

In addition, another trend has established itself throughout 2012. The average age of business owners approaching the company to sell their businesses has significantly increased. “At no time in the past have we interacted with so many business owners over the age of eighty” says Neumann. Presumably a lot of folks have waited since the massive downturn in 2008 with hopes of a return to a 2007 type of environment. However, they also recognize that such profitable times will not materialize within the current time period, so the decision was made to implement exit strategy planning—albeit very, very late.

In sum, these predictions reflect the ‘guarded optimism’ of many business owners for 2013. The company projects continued growth with more deal-making due to more ‘quality’ profitable businesses becoming available, and an environment driven by many very well-financed, highly experienced buyers who will be very selective when choosing a business to invest in.

From the firm’s point of view, this will require  cautious expansion with the additional opening of new offices to better serve clients. Expansion will allow the company to not only offer a wide spectrum of M&A services, such as legal and accounting/tax advisor referrals, acquisition financing and deal structuring, but also to offer these services throughout a wider geographical area.

See our latest Hotsheet listing of available businesses