Industry Trends: What’s HOT/What’s NOT

February 17, 2012 by brian

While cycles in the economy can have a major impact on different industries, we are also seeing some transformative and permanent changes in specific business types.

HOT
Manufacturing.  Manufacturers large and small are very attractive to buyers.  If they have weathered the past few years they are seen to be either resistant to downturns, have counter recessionary products or are have effective management.
E-Commerce.  Whether partially or completely “virtual”, e-commerce companies have generated tremendous buyer interest.  Buyer concerns about low barriers to entry and changing technology seem to be diminishing.

NOT
C-Stores.  C-Stores have been slowly declining over the last few decades.  The repeal of sunday sales, “Blue Laws”, and pay at the pump technology, combined with the growth of super regional drug stores have chipped away at in-store sales.  Meanwhile the competitive pressures of vertically integrated distributors entering the retail market, and the cost of credit card transactions have shaved the margins on gas to pennies per gallon.  Larger chains and distributors have reinvested in well located, co-branded stores: many mom and pops have been left behind.

Restaurants.  Restaurants are currently down for two reasons.  First, most buyers perceive restaurants to be sensitive to the downturn in the economy.  Secondly, most budding restaurateurs believe that a start-up will be cheaper and more fulfilling than an acquisition.