Partisan Bickering In Washington Undermining Confidence In Business Sales

Gridlock in Washington is exacerbating fragile confidence among business buyers, many brokers believe. Quizzed about the state of the marketplace in a survey by, many professional intermediaries …

Gridlock in Washington is exacerbating fragile confidence among business buyers, many brokers believe.

Quizzed about the state of the marketplace in a survey by, many professional intermediaries expressed concern about the corrosive effect of partisan squabbling among federal policymakers on activity in business sales.

Attested to by the brinkmanship that almost sent the U.S. hurtling off the fiscal cliff in January, the political establishment is as polarized as it has been at any time in the modern era. Between Republicans that insist on tackling the deficit through spending cuts and Democrats who believe wealthy taxpayers should bear the brunt, few politicians appear capable of bridging the divide.

Asked to choose a maximum of two factors from five undermining confidence, 21% selected ‘other’ and offered variations on a damning verdict of the Washington elite. Whether focusing on the Obama Administration or Congress as a whole, many brokers expressed doubts about politicians’ ability to reach compromise and get things done.


“Concern about risk, uncertainty about the economy and dissatisfaction with the USA government from top down” were particularly pernicious in draining market confidence, wrote one broker.

However, a perception that credit remains scarce, cited by 49%, polled the biggest response when brokers were asked which factors were most undermining confidence.

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Also draining confidence among buyers is the gloomy media coverage of the economy (chosen by 32%), concerns about balance sheets after five years of challenging trading conditions (21%), the huge public/federal debt (19%) and the EU debt crisis (16%).

However, although those polled were skeptical about the ability of federal policymakers to reach compromise over a range of issues, they were nevertheless sanguine about the long-term picture.

Asked whether they thought the western, advanced economies could recover from a half decade of decline relative to the emerging economies, 56% of U.S. brokers agreed that “Yes – and I believe the US can retain global hegemony”. Globally – and most respondents were based in western nations like the UK, Canada and Australia – intermediaries were less bullish, with only 36% holding this view.

One in four (25%) worldwide ticked "Yes – the advanced western economies can return to pre-2007 levels of growth, but I believe that Asia will inevitably eclipse the US and Europe."

Thirty-nine percent believed western decline, relatively speaking, was inevitable, opting for "No – demographic and debt problems are too acute; the West must become accustomed to a period of low growth.”

Sectors to watch

Brokers were also asked for their sectors to watch – i.e. those attracting, or likely to attract, a growing number of buyers.

The manufacturing and energy sectors were frequently highlighted, with the latter’s growing prominence powering the former’s resurgence.

An explosion in shale gas production has given the U.S. manufacturing industry a cheap source of energy to bridge the operating-cost gap with Asian competitors.

At $2.30 per million Btu, the price of natural gas is negligible compared to prices in Asia and the Middle East, which tend to range between $13 and $16. And while U.S. national economic output grew at just 1.7% in 2011, manufacturing output soared by 5.2%. 

Sluggish wage growth, another factor making western manufacturing more cost-effective, also underpins the growing popularity of a raft of other sectors pinpointed by brokers: namely bargain retail; consignment retail; non-discretionary retail and services (because "people still have to eat, wear clothes, and let off steam"); and maintenance and repair businesses ("because people are keeping things longer").

Senior care too, particularly care-at-home services, is attracting buyers readily, say brokers, with demographic trends pointing, inexorably, to an ageing population.


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