COVID-19, while having a significant negative impact on the US economy, it has been a boon for route-based businesses as consumers have been forced to shift their buying habits from off-line, to online, as most brick and mortar stores have closed.
Because of this backdrop, we have three forces at play that are all driving valuations higher:
- Increased buyer interest in FedEx routes (more competition)
- Higher profits thanks to the surge in demand
- Very attractive financing options
Investors are now very focused on buying recession/pandemic-proof businesses. Witnessing first hand how many companies are not considered essential and significant uncertainly regarding when the economy will open back up and at what level, Fedex routes have never looked more attractive to buyers. With more buyers looking at the same number of opportunities, valuations are increasing.
Second, with revenues and earnings up significantly in 2020 overall (two peaks in one year), route owners have the opportunity to sell their businesses for more as a combination of higher valuations on higher cash flow equals high transaction values.
Finally, the Small Business Association, has released very attractive financing options for buyers through the CARE act. Specifically, the SBA will pay both principal and interest for the first 6 months of any loan used to acquire a business. What does this mean for you as a seller? The more affordable financing is, the more a buyer can pay for a business without impacting the economics.
In short, today might be one of the best times to sell your FedEx route business. With investors excited about the resiliency of the business, higher profits and financing that hasn’t been this attractive in years all points to higher transaction prices for your routes.
If you want to learn more about the sales process, the current market environment or want to know how much your business could be worth (we provide free business valuations), please give us a call at 303.997.0796 or email at info@blackironadvisers.com.