With interest rates at historic lows and asking prices of businesses under review as a result of the crisis, cash is still king for buyers looking to make their move in a post-COVID world.
“I have £120k in cash and I am looking to use around £80k as a deposit,” says Michael Bedlington, 44, a former software salesman from Oxford, who has been searching BusinessesForSale.com.
“I was looking for a freehold pub and was about to put an offer in, but once the crisis hit I panicked about the prospects for the entire industry. But I’m looking again because there might be more opportunities for people like me in a decent cash position,” Bedlington adds.
Michael’s situation is not unusual.
Last October, the Bank of England reported that the amount of money deposited in easy access accounts grew in 2019 to over £760billion. The amount in fix-rate accounts grew by over £3 billion.
With interest rates at historic lows and with the genuine possibility of negative interest rates on the horizon (an interest rate that punishes savers for keeping cash in the bank, as opposed to rewarding them), it is little surprise that BusinessesForSale.com has seen a spike in interest in certain sectors from prospective buyers with cash.
“My husband and I are looking for a launderette,” says Susan Templeton, 34, from New Malden in South West London.
“Even though I have my own washing machine at home, with young children, I found myself overloaded at weekends and would use the local launderette when the pile got unmanageable,” Susan adds.
“I got talking to the owner one day. He’d taken on the space to expand his Newsagents– which was next door – but changed his mind and put in a launderette instead. The margins can be very good, in the right location. If I don’t find one for sale then I will start my own, but ideally, I’m looking for an existing business that is ready to go as we don’t have the capital to fit it out from scratch, as brand new commercial industrial washing machines and dryers can cost thousands. Although I have seen some second-hand machines on Ebay for sale which I am keeping my eye on.”
Susan states that she and her husband have £30k in cash and they’re ideally looking for a leasehold opportunity near to where they live.
“We don’t want to move location for the business. The children are too settled at school. However, it used to take me 1 hour and 15 minutes sometimes, door-to-door, when I was working in Central London, so if we have to travel an hour to the launderette, then happy to do so… So for us, where we are in South London, we are looking out as far as Guildford, Woking, Croydon, Crawley or up the M3 as far as Basingstoke.”
Currently, there are over 50 laundry businesses for sale in the UK on BusinessesForSale.com, from Newcastle Upon Tyne to Cornwall. Prices range from £500k to £10k for a leasehold.
“Some business sectors have been wiped out,” says Rufus Bazley, Marketing Director at BusienssesForSale.com. “But it is temporary,” he adds.
“We are already seeing the emerging trends that suggest that once we get over the lockdown period, people will go back to thinking about the future and what they want. We may see people shift their focus.
Many people change their mind about the type of business they want to buy once they see what is out there. We may see more of this in the coming months, as buyers with cash hold a stronger negotiating position,” he adds.