The Halloween Economy

By Sudarsan Pattabiraman (M&A Advisor) | 510.944.5616 | sudarsan@upclinch.com

2024 Halloween is over and officially kickstarted the 2024 holoday economy. Given the joy and happiness surrounding Halloweend and its ramp-up, its prudent to explore and understand the potential of this economy and its contribution to the retail space. 

Retailers:
Halloween retail in the U.S. involves a variety of segments, each encompassing different types of retailers.

Ø  Pop-Up Stores - In 2024, Spirit Halloween continues to lead in the Halloween pop-up retail model, operating more than 1,500 temporary stores nationwide. These pop-up stores, which thrive in vacant retail spaces, help meet the seasonal demand for costumes, decorations, and Halloween-specific goods. California itself hosts hundreds of Spirit Halloween locations each season, though exact numbers vary due to the temporary nature of these stores.

Ø  Online and Traditional retail - For Halloween goods overall, Amazon leads costume sales online, followed by key players like Walmart and specialty retailers including Spirit Halloween, Party City, and Etsy. Nationally, brick-and-mortar retailers make up about 80% of the Halloween retail space, with the remaining 20% covered by online platforms, which have seen an uptick in usage for Halloween-related purchases.

This trend reflects a larger movement where seasonal and flexible retail models, like pop-up stores, have become an essential part of Halloween spending, capitalizing on unique spaces and offering tailored experiences as demand peaks each October. This emphasizes the specialization preferences of the educated consumers of 2024.

The Halloween Economy:

Here’s a detailed look at Halloween 2024’s retail economy with spending projections across categories:

• Total Spending: Halloween spending for 2024 is expected to hit $11.6 billion, maintaining a strong trend even after 2023's record of $12.2 billion. This high level reflects robust interest in the holiday, which has become a full-season celebration for many Americans. Average consumer spending is estimated at $103.63 per person, encompassing costumes, decorations, and candy
• Early Shopping Trends: Almost half of consumers (47%) began shopping for Halloween in September, a significant increase from 32% a decade ago. This shift, particularly noticeable among the 25-34 age group (56% of whom shop early), is driven by excitement for fall festivities and the perception of Halloween as a full-season event
• Decorations: Halloween decorations have seen the most notable rise, with spending expected to reach $3.8 billion. This represents a 42% increase from 2019 as consumers expand their Halloween décor budgets to enhance celebrations at home. Retailers like Michaels and Spirit Halloween have responded by offering extensive décor collections that appeal to both traditional and new Halloween enthusiasts
• Costumes: Costume spending is projected to total $4.1 billion, with adults, children, and pets all contributing to this category. Adult costume spending will reach around $2 billion, a jump fueled by both classic and pop-culture influences, such as characters from the *Barbie* movie and *Beetlejuice*. Children's costumes will account for $1.4 billion, with favorites like witches and superheroes, while pet costumes are projected to reach $700 million, with pumpkins and hot dogs as popular choices. . Popup stores with other retailers like Party City and online platforms such as Amazon, Walmart, and Etsy dominating costume sales, major retailers in this category together account for approximately 13% of the costume retail market alone. 
• Candy: Candy sales remain essential to Halloween, expected to climb to $3.5 billion, an increase from last year despite inflation. As 28% of families plan to trick-or-treat, demand for treats has been steady, making it a crucial element in Halloween spending. The trend is also influenced by tradition and the social nature of the holiday, with parties and neighborhood gatherings fueling purchases
• Shopping Channels: About 32% of consumers are choosing to shop online, a growing trend as people seek convenience and variety in their purchases. Meanwhile, 40% are shopping at discount stores to manage their holiday budgets. The combination of these trends points to an evolving consumer approach, balancing budget-conscious decisions with the desire for a rich Halloween experience

The steady spending and early shopping reflect Halloween's growing importance in the retail calendar, setting a strong tone for the upcoming holiday season.

Contact Sudarsan for planning and executing your perfect exit / strategic acquisition. Schedule time to unlock the business value and realize it for the benefit of you, your family and your community. Email:sudarsan@upclinch.com   Phone: 510.944.5616

How many business listings actually sell?

 By Sudarsan Pattabiraman (M&A Advisor) | 510.944.5616 | sudarsan@upclinch.com

The rate of success for businesses listed on the market varies widely based on their size, preparation, and sector. Generally, small businesses (like those with under $3 million EBITDA) have success rates between 15-30%, while mid-sized businesses can see success rates closer to 30-70%. A business's likelihood of sale is influenced heavily by the level of seller preparedness, business attractiveness to buyers, and current market conditions. These statistics can be tricky to verify because brokers often define "success" differently, sometimes excluding cases where the seller changes their mind or withdraws the listing.

The success rate of businesses selling after going to market depends on several factors, with larger, well-prepared businesses typically having an edge. Market readiness, including clear financials and accurate valuations, plays a significant role. Larger businesses often have well-documented financials and a diversified customer base, which makes them attractive to buyers looking for stability. Small businesses, however, can struggle in these areas, sometimes lacking the detailed documentation or robust financial records that buyers expect. This lack of preparation can lead to deal-breakers during due diligence

Another factor is buyer perception of risk. Small businesses are often seen as riskier investments due to their reliance on a single owner or a few key clients. Mid-sized and larger companies, by contrast, may have diversified revenue streams and stable management, which reduces perceived risk and increases buyer confidence. Additionally, realistic pricing expectations are crucial; small business owners may set prices based on emotional attachment rather than market value, which can turn buyers away. Larger businesses, especially those with professional advisory representation, tend to be priced more competitively and are therefore more appealing

Finally, economic conditions impact sales rates. Strong market conditions and accessible credit make acquisitions more attractive, boosting the likelihood of successful sales across all business sizes. Professional representation also matters; experienced advisors bring a network of buyers, a strategic approach to negotiation, and market insight, which particularly benefit mid-sized and larger businesses.

Contact Sudarsan for planning and executing your perfect exit / strategic acquisition. Schedule time to unlock the business value and realize it for the benefit of you, your family and your community. Email:sudarsan@upclinch.com   Phone: 510.944.5616

Sources:

Morgan & Westfield estimates approximately 15-30% success for small businesses and up to 70% for larger ones. Similarly, surveys and data from firms like BizBuySell report varying statistics on business sales, reflecting how only well-prepared and market-aligned businesses attract buyers effectively.

Your advisor's Candor - Is it worthy?

 By Sudarsan Pattabiraman (M&A Advisor) | 510.944.5616 | sudarsan@upclinch.com

Having an advisor who’s radically candid can make a huge difference when you’re getting ready to sell. Instead of sugarcoating things, they’ll give it to you straight, which can be a lifesaver.

For instance, they’ll point out any weak spots you might not see—like if your financials don’t look great or you’re too dependent on one big customer. This feedback isn’t always easy to hear, but it’s so much better to address these issues now rather than lose buyers or get a lower offer later.

They’ll also help you see hidden value. Maybe there’s some untapped potential you haven’t thought about, like improving your online presence or leveraging intellectual property that could bump up the sale price.

An advisor who’s upfront will also give you a realistic valuation. It’s easy to overestimate what your business might go for, so having someone tell you what’s reasonable in today’s market can save time and keep you from getting disappointed.

A candid advisor also helps with preparation, focusing on the things that really matter to buyers, like cutting unnecessary costs or organizing your operations more efficiently. This way, you’re presenting the business in the best light without any skeletons in the closet.

 And knowing that you’ve tackled potential issues ahead of time helps build buyer trust—no surprises mean buyers are more likely to stick with the deal.

They’ll also keep your expectations in check, so you’re not blindsided by the ups and downs of the sale process. So, in the end, having someone who’s straight-up honest with you ensures you’re fully prepared, helps you avoid deal-breakers, and gets you set up for a smoother, more profitable sale.

Contact Sudarsan for planning and executing your perfect exit / strategic acquisition. Schedule time to unlock the business value and realize it for the benefit of you, your family and your community. Email:sudarsan@upclinch.com   Phone: 510.944.5616

The highest offer isn’t always the best

 By Sudarsan Pattabiraman (M&A Advisor) | 510.944.5616 | sudarsan@upclinch.com

Not necessarily! While it might look appealing at first, there’s a lot more to think about:

1. Deal Structure: An all-cash offer might be more attractive than a higher offer with earn-outs or stock components, especially if the payout is stretched over time or tied to performance metrics that are hard to control post-sale.

2. Buyer’s Financial Health: A buyer with questionable finances might struggle to fulfill the terms, even if the offer is high. Assessing the buyer’s stability and ability to close the transaction can help ensure the deal goes through as planned.

3. Cultural Fit and Business Continuity: If the current business has a legacy, loyal customer base, or employee culture that is essential to its success, a buyer with a vision or culture that aligns with the business may offer a smoother transition, even if the financial offer is lower.

4. Liabilities and Assumed Risks: Sometimes buyers include contingencies, such as the seller holding liability for potential future issues. A high offer with significant liabilities left on the seller’s side could be less appealing.

5. Synergies and Strategic Fit: A buyer who brings strategic synergies, industry expertise, or a network can create added value post-acquisition, potentially benefiting existing shareholders or employees.

6. Certainty of Close: A slightly lower offer from a buyer with a reliable track record of closing deals may be better than the highest offer from a buyer with less experience in acquisitions.

A holistic review of the terms, buyer profile, and strategic alignment will help clarify if the highest offer is indeed the best.

Contact Sudarsan for planning and executing your perfect exit / strategic acquisition. Schedule time to unlock the business value and realize it for the benefit of you, your family and your community. Email:sudarsan@upclinch.com   Phone: 510.944.5616

Why sell your business ? Realize value from the biggest investment in your life

By Sudarsan Pattabiraman (M&A Advisor) | 510.944.5616 | sudarsan@upclinch.com

Selling a business is a huge decision, and it’s often driven by a mix of personal goals, market timing, and life circumstances. Here’s why many owners decide it’s time to make a move:

1. Diversifying Your Nest Egg: Many owners have most of their wealth tied up in their business. Selling can allow you to spread that money around, investing in different areas and reducing the risk of having all your eggs in one basket.

2. Time to Enjoy Life: For a lot of owners, selling means finally getting to enjoy all the hard work they’ve put in. Whether it's retirement or just a change of pace, selling can free up time and cash for whatever comes next.

3. Striking While the Iron’s Hot: Timing is everything! When your business is thriving and the market's favorable, you’ll likely get a better price. Selling when things are going well often attracts top-notch offers and lets you walk away with more.

4. Taking Advantage of Market Trends: If your industry is buzzing—maybe private equity is swooping in or there’s a trend of bigger companies buying smaller ones it can be smart to sell while buyers are looking for businesses like yours.

5. Looking for a New Challenge (or Just Over It): Burnout is real! Running a business can be exhausting, and some owners simply reach a point where they’re ready for something new or want a break.

6. Personal or Family Reasons: Life happens, and sometimes health or family priorities become the top concern. Selling can offer a way to step away while securing the financial side of things.

7. No Successor in Sight: If there’s no clear successor, whether family or someone on your team—selling can give the business a fresh start with a new leader and a better chance to keep growing.

In the end, it’s about getting what you want out of the sale, whether that’s financial freedom, peace of mind, or just the chance to try something new. Selling when your business is in good shape and the timing feels right can make the whole process smoother and more rewarding.

Contact Sudarsan for planning and executing your perfect exit / strategic acquisition. Schedule time to unlock the business value and realize it for the benefit of you, your family and your community. Email:sudarsan@upclinch.com   Phone: 510.944.5616