AAfter a sharp decline at the start of the COVID-19 pandemic, the rate of transactions with small businesses is once again approaching 2019 levels, with owners finding reasons to exit and sellers seeing businesses that have weathered a storm. two years.
Small business buying and selling activity has increased nearly every quarter since the initial pandemic shock, data shows BizBuySell. Additionally, sales transactions for U.S. small businesses — often defined as less than 500 employees — in the first quarter of 2022 were up 24% from the same period last year, approaching 2019 levels.
From left to right: Max Friar, Brooks Kindel, Ryan Roff
However, disruptions such as inflation, a tight labor market and Russia’s invasion of Ukraine are leaving some small business owners hesitant, said Max Friar, managing partner at Calder Capital LLCa Grand Rapids-based small business mergers and acquisitions advisory firm.
Friar predicts even more activity as people and businesses adjust to these disruptions, as do many who have adapted to the pandemic.
“I don’t think we’ve compensated companies that would have otherwise sold (in 2020),” Friar said. “I think there’s a pent-up supply in terms of sellers.”
The pandemic has also caused major changes as many people have begun to rethink their work roles and reassess potential new jobs, said Brooks Kindel, business growth consultant for the Michigan Small Business Development Center at Grand Valley State University.
“From a buyer’s perspective, if you look at a business that was well run and had a history of surviving the pandemic and finding new revenue and new ways of doing business, that says a lot,” Kindel said. “If your business can survive the pandemic, you have a head start on those that failed and may have closed.”
West Michigan small business owners going through an ownership transition stress the importance of spending time training new owners and retaining good employees to support the new management team.
Family-owned specialty food and beverage store Siciliano’s Market Inc. is changing ownership after emerging from the pandemic mostly unscathed as it was deemed “essential” and able to remain open through state restrictions.
Grand Rapids west side staple owners Steve and Barb Siciliano are set to retire this summer and will sell the business to longtime family friend Jeff Boorsma as MiBiz reported recently. Boorsma’s daughter, Tiffany Sipka, and her husband Dan Sipka will run the business.
The Sicilians, who opened the current market location in 1993, had been considering retirement for five years. They began actively planning to sell their business last summer and were approached shortly after with an offer from Boorsma. Steve Siciliano stressed the importance of working with the new owners to ensure a smooth transition.
“I work closely with new owners, train them and basically mentor them,” Siciliano said.
Since January, Steve Siciliano has been working closely with Dan Sipka, who has been in the market full-time for two months.
“He basically runs the store with the assistant manager I have,” Siciliano said. “Now that we’re complete and the new owners know pretty much what’s going on, I can leave whenever I want. We work out the details on a daily basis, basically.
Most owners have to prepare for a certain period of time when they have to stay in the business, which can range from around three to six months but can take up to a year, Friar said.
Ryan Roff — the founder of boldSOCKS who sold his business in Grand Rapids OCI Ventures Inc. in March – chooses to contract with the new owners for a period of time to help them with training and any other issues that arise, he explained.
“Being there helped them get started quickly and they were able to start shipping products the following week (after the change of ownership),” Roff said. “I want to see them succeed, and our business also has a social enterprise element, so I want to see these charities succeed and what we’ve worked hard to establish continue.”
boldSOCKS employees who remain with the company during the transition also play an important role in the success of the transition process, Roff said.
A Bourbon Restaurant founders George and Meg Chittenden, who recently sold their ownership shares to their business partners, echoed that sentiment.
“We are very lucky with the core group of staff who have stuck with us through the pandemic,” said George Chittenden.
Meagan and Brett Freriks, the couple who bought the Chittendens’ shares, helped start the Bridge Street restaurant when it opened in 2017 on the west side of Grand Rapids.
“They’re going to do great things,” said George Chittenden. “They’ve been there from the start as well, so it’s in good hands.”
Changing course during COVID
As Roff used boldSOCKS in 2020, burnout took its toll as two of the sock company’s biggest markets – office workers and socks purchased for wedding attire – were both severely impacted by pandemic closures.
“Browsing during the pandemic was much more of a stabilizing role, and I could feel to myself that it wasn’t something I wanted to do any longer,” Roff said.
The pandemic has also caused the Chittendens to reevaluate their professional lives, leading them to stop owning and running their restaurant. They plan to ensure operations are squared off at One Bourbon before focusing on spending more time at home with their young child, George Chittenden said.
“A silver lining of the lockdown restrictions in 2020 was that it gave us a taste of life outside of the nine-to-five,” said Meg Chittenden. “We all may have had a different view of how we might live life.”