A relentless diet of gloomy economic news is stifling activity in the businesses-for-sale marketplace, according to a top business transfer agent.
With the recovery precarious and Eurozone debt crisis still unresolved, the marketplace for buying and selling businesses is characterised by caution.
But while banks are as risk-averse as ever, high-quality businesses are still finding willing buyers with cash to fund deals and bargains exist for buyers who can raise the cash, suggests Michael Taylor, director of Everett Masson & Furby (EM&F).
He concedes, however, that: "It's a tough marketplace." From the buyer's point of view every 'I' has to be dotted, every 'T' crossed. Everyone - the buyer, the seller, the solicitor - is looking into deals in so much more detail because they're so nervous."
While he accepts the need for caution, the Devon-based agent fears that the torrent of bad news on the economic front is undermining confidence at every stage of the business-sales process. "The manufacturing sector is a prime example," he explains. "It was all looking rosy, then you get a negative report and it makes the sector flat again because of the uncertainty.
It's definitely a buyers' market, especially if they have cash in their pocket," says Taylor. "Some people are under pressure to get out, so if you dangle that carrot to give an escape route then people will take it
EM&F director Michael Taylor
"Even if an article isn't backed up, it just puts doubt in people's minds. You get one bad story on, say, a post office and you're back to square one - not just people looking for them but people could pull out of ongoing transactions. It really does have a huge effect on business sales."
Although entirely understandable, some buyers are being excessively circumspect in what is actually a buyers' market.
"It's definitely a buyers' market, especially if they have cash in their pocket," says Taylor. "Some people are under pressure to get out, so if you dangle that carrot to give an escape route then people will take it."
Sellers of struggling businesses need to be realistic about what they can achieve price-wise. Despite the prospect of challenging times ahead as both individuals and the state pay down their debts, "many sellers are refusing to sell for less than a certain price."
Hysterical media coverage seems to exacerbate the madness of crowds. One broker reported that enquiries on businesses for sale often come in waves followed by quiet periods as buyers alternate between irrational exuberance and taking fright. People's perceptions have always been shaped by the news, but arguably, the sheer ubiquity of news and analysis amplifies people's worries.
The last, admittedly much milder, recession in the early 1990s played out in a world before rolling 24-hour news, the internet, smart phones and Twitter. If you're a tech-savvy social media user there's almost no escape; whether you're on the computer in the office, on the train with your iPhone or at home watching the TV, you're plugged in 24-7.
But shrewd buyers will recognised that the parlous state of the economy doesn't mean it's a bad time to buy - quite the opposite in fact, according to Michael Taylor. "It's straightforward economics: there's lots of supply and little demand. Sellers will get the red carpet out for a buyer who can proceed. Many people can only afford to buy a business subject to selling their property, which many are struggling to do."
And it's not all entirely bleak for sellers either. "A quality property will still sell," insists Taylor, who adds the caveat that the business must be "priced realistically."