Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Inc. entitled “How Change Offers New Opportunity for Buying a Business, During and After Covid-19” discusses how interest rates, SBA loan program changes, and other current conditions are presenting big opportunities for buyers.
Interest rates have dropped to historic lows in response to the economic conditions brought on by the Coronavirus. In addition, the Cares Act introduced a debt relief program which subsidizes the first six months of principal, interest and fees on SBA loans. These factors bring huge savings for buyers.
Businesses available for sale may be in a variety of situations. Some owners may simply need to sell and opt for an asset sale which can be a more simple process for the seller and buyer. Some businesses, especially those that are essential, are doing well. And others have positioned themselves for post-pandemic growth opportunities. This all adds up to a variety of options for buyers.
Click here to read the full article.
A recent op-ed from CNBC entitled “How to sell your business and retire during the coronavirus pandemic” discusses what business owners that would like to sell are facing and how they can position themselves for a successful sale.
The Coronavirus pandemic has put businesses in a variety of positions. Some essential businesses have seen an increase in sales, resulting in increased value and demand. On the other end of the spectrum, some businesses have been forced to drastically reduce their operations and must make a plan to reopen and position for a sale.
The author, an experienced business broker, offers the following recommendations to prepare for a sale in the next year or two:
- Get clear on your overall goals
- Clean up your financial practices
- Identify risk factors that could derail a sale
- Battle-test your operations
Click here to read the full article.
A recent article from Axial entitled “Corp Dev and COVID: What 3 Deal Pipelines Look Like Now” checks in with corporate development professionals at strategic acquirers to see how COVID-19 has impacted their activities and plans.
Isaac Lund of National Express explains that they are primarily in a holding pattern with a decrease in demand for their services. Deal-making has also slowed as they wait to see how the current situation progresses. However, they are looking towards signs of recovery which will help get deal-making back on track.
Craig Rodwogin of NAES Corporation discusses how they are an essential service and continuing operations. As an essential business, they are not seeing large delays in deal-making. Minor delays are expected to last only a couple of months. Replenishing the pipeline has become more challenging, however.
Monte Salsman of Winsupply explains that their numbers are down a bit, but not a lot because all of their businesses are essential. One large deal was completed during the pandemic, and the rest have been put on pause until there is a better sense of how things will play out. They are also looking at how to approach sale prices and seller expectations.
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A recent article from Axial entitled “Consumer M&A Activities & Opportunities — COVID-19 Virtual Roundtable” recaps the week 10 Axial virtual roundtable discussing the current state of consumer sector M&A.
Ten industry experts gathered virtually to discuss the following:
- Accessing relevant industry data
- What transactions are most likely to close in the second half of the year?
- Valuations when the new normal is not actually the new normal
- E-commerce and Amazon
- New-customer acquisition
- New hurdles for valuations
- Getting a deal done
- Transaction structures and risk sharing
- Due diligence considerations
- Government loan programs
- Distribution channels
- The virtual deal process
- Grocery stores
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Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Axial entitled “Structuring Transactions Post-Coronavirus — COVID-19 Virtual Roundtable” offers highlights from a recent virtual roundtable with 10 middle-market deal professionals discussing how deal structure has been affected by the Coronavirus.
Key topics discussed include:
- How are perspectives on virtual diligence evolving?
- Lenders taking more conservative posture
- For existing deals in the pipeline that are sponsor deals, are debt providers going back to the sponsor for additional equity contributions to get deals done?
- Private equity firms focused on maximum flexibility
- Dynamic between buyers and sellers re: difference in valuation conversations prior to and after coronavirus
- New standards for environmental health and safety due diligence post-COVID
- How are sellers dealing with repricing and retrading of deals in progress?
- Sellers are showing flexibility and understanding of the circumstances
- Need for lengthened diligence period
- How much diligence can be done virtually? Will you close a deal without meeting in person?
Click here to read the full article.
A recent editorial from The Washington Post entitled “A Misguided Assault on Mergers” discusses proposed legislation that would temporarily limit mergers.
The Pandemic Anti-Monopoly Act would prohibit all large mergers, mergers involving hedge funds, and mergers involving private equity firms until the FTC determines that consumers and small businesses are no longer under severe financial distress.
This proposal could have a major impact on mergers large and small, severely limiting deal activity for an unknown period of time.
Click here to read the full article.
A recent article from business.com entitled “10 Need-to-Know Tips for Selling Your Business in 2020” offers helpful advice for business owners considering a sale. Whether the sale is imminent or a long ways away, it’s best to start planning sooner rather than later for this complex process so that you can set yourself up for success.
The article discusses the following 10 tips:
- Determine your business value.
- Seek legal and financial expertise.
- Keep it quiet.
- Hire a professional business broker to help you with listing your business for sale.
- Set a realistic asking price.
- Get the paperwork in order.
- Separate your personal expenses from the business.
- Get your offers in writing.
- Tidy up your curb appeal.
- Tie up loose ends.
Click here to read the full article.
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Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Columbus CEO entitled “7 things to consider when selling your company” explains seven important things to remember when selling a business according to wealth planners and business owners.
Despite the impact of the Coronavirus, the M&A market has not ceased transactions. The reality is that baby boomers are still considering retirement and 45 percent of business sales are considered opportunistic. This means that it’s important to be prepared for a sale in the event that an offer is made.
Here are 7 things to consider:
- Ask yourself: Am I ready? – Being emotionally ready to walk away from the business is one thing, but the numbers are another. Before you decide it’s time, be sure that the financials align with your post-business owner goals.
- Get help – There are professionals who excel in these areas just like you excel in your business specialty. Use their knowledge and networks to your advantage.
- Be ready for opportunities – The more prepared your business is to sell, even when you aren’t seeking a sale, the more you can capitalize on a deal if one is to be presented to you.
- Get your financial house in order now – You should always be running your business like you’re going to sell it next year, even if you aren’t planning to sell for another five or ten years.
- Plan for your employees – Selling your company impacts your employees, and your employees impact the value and transition of your business. Be sure to plan for both.
- Know your value – Many owners are unclear on the actual value of their company. Get a valuation done so that you are fully aware ahead of time.
- Trust yourself – Bringing in the help of professionals is important, as is doing your due diligence and tracking the numbers. However, you must also follow your instincts since ultimately the final decision falls to you.
Click here to read the full article.
A recent article from The Press-Enterprise entitled “Small business quandary: Should I continue or sell?” provides tips for business owners trying to determine the steps to take during the COVID-19 pandemic.
As a business owner, if you are struggling right now, you are not alone. Despite the pandemic, your business likely still has value. If you can determine where this value is, you may be able to retool and continue on, or you may be able to receive the best potential sale price for your business. The way in which you approach the pandemic will depend on which of the following three categories you fall into:
- Independent Contractor: You may be able to rework your services to be available online. You might consider applying for unemployment under the CARES Act.
- Small Business Owner: If you have a brick-and-mortar location, employees and physical assets, you want to determine your going concern value. This means determining the value of both your tangible and intangible assets combined. If you can continue business while social distancing, develop a plan to do so.
- Entrepreneur: If you’re in this category, you may view this pandemic as an obstacle to overcome since your whole career is based on finding a need and filling the void.
Regardless of what category you fall into, don’t make any decisions based on emotion and utilize the help of trusted professionals.
Click here to read the full article.
A recent article from Security Sales & Integration entitled “Big Idea of the Month: Your Business Should Always Be for Sale” offers the advice of a business owner who successfully sold their business in alignment with their goals.
Michael Marks attributes many things to his success a business owner. One of his goals from the beginning was to sell his business before January 1st 2020. While he suggests creating a successful, profit-driven organization, his big advice is to always treat your business as if it’s for sale. You don’t necessarily have to seek out buyers but you should always be willing to listen when an offer is made.
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Around the Web: A Week in Summary
A recent blog post from Exit Strategies Group entitled “Can you sell a distressed business?” explores the factors that impact the salability of a business in distress.
The ability to sell a distressed business is largely dependent on the ability to find a buyer who believes that they have the skillset and resources to turn the business around. In general there are four categories of distress:
- Manageable impact, event driven
- Unmanageable impact, event driven
- Manageable impact, systematic
- Unmanageable impact, systematic
COVID-19 would be considered unmanageable impact, event driven. In this scenario, it is unlikely that a new owner would be able to run a business any better than the current owner. However, under certain circumstances a good business broker would be able to attract a buyer that is able to utilize the businesses’ current resources to stay afloat by offering a different product or service that is currently in high demand.
Click here to read the full article.
A recent article from Forbes entitled “The Good News For Your Business Valuation During Unprecedented Times” explains why the current pandemic is likely to have a smaller impact on your business valuation than you might think.
Business valuations are less likely to be impacted for most businesses for two reasons:
- Recasting The Financials – This practice allows a business broker to adjust the financials to compensate for any expenses or loss of funds that are considered unrelated, unnecessary or unlikely to happen again. A pandemic falls into the last category.
- Forward-Looking Business Valuations – A business broker will assess both the historical performance of the business as well as the future facts of the business. Both play a role in how much a company is worth.
Click here to read the full article.
A recent article from Axial entitled “A Shift in Investment Strategies Post-Coronavirus – COVID-19 Virtual Roundtable” highlights the main talking points in a discussion regarding the current pandemic between nine Axial members.
In this week’s virtual roundtable, experts address topics including new and innovative capital structures, how government stimulus funds are impacting the private capital markets, and what’s happening with transaction dynamics. According to the nine members:
- PPP funding is helpful for businesses that are impacted immediately, and those in the service businesses who need to keep employees on the sidelines. For other types of businesses they may pose some obstacles.
- Permanent Equity rolled out a program called Safe Harbor that offers creative capital solutions to businesses struggling from the pandemic.
- Transactions have slowed but not come to a halt. Many transactions are likely to be on pause until an in-person negotiation is possible.
- Strategic buyers are on the market less, making more room for financial buyers to experience increased deal flow.
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Around the Web: A Week in Summary
A recent article from BizBuySell entitled “COVID-19 Stalls Q1 Transactions; Presents Once in a Lifetime Opportunity for Acquisitions” provides insight into the current state of the M&A market as well as actionable advice for both owners and buyers at this time.
Following the promising start to 2020, transactions took a 43% dip in response to the Coronavirus pandemic. However, the quality of the businesses that were sold improved based on recorded metrics. While many businesses are currently required to be closed, and the economy has been deeply wounded, the circumstances present a stunning opportunity for willing buyers. At this given time, buyers who are prepared can not only close the deal of a lifetime because prices are being driven down, they may also qualify for the SBA Debt Relief Program released this year. Owners can take multiple actions to increase the appeal of their business, with the most important focus being on reducing the risk the buyer would be taking upon acquisition.
Click here to read the full article.
A recent article from Thomas Publishing Company entitled “Has the M&A Market Caught a Virus Too?” evaluates the implications of the Coronavirus on the M&A market.
It’s no secret that given the current circumstances, M&A activity has begun to slow. However, the reality of this downturn is much different than in past years, when the damage has been a result of economic problems. The external factor that is forcing a cessation of demand in this scenario is merely causing deals to be put on hold rather than stopped all together. For investors who are ready to weather the storm, there are great rewards on the other side of it. That being said, for the time being, the first priority is to ensure liquidity and solvency. Businesses have to survive the downturn before they can consider other options. Experts estimate that the current downturn will last approximately nine months before things start to look up again and considering the natural flow of the market, it is likely to be a buyers’ market for a while. Before COVID-19 it was a very strong sellers’ market, so this change has created space for a more level playing field.
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A recent blog post from Exit Strategies Group entitled “COVID-19 Exit Planning Insight: Keep a Journal” suggests that business owners begin keeping a real-time record of all relevant events and decisions during the pandemic.
When a business is sold, it is necessary to share the past three years of financials. Inevitably, the COVID-19 crisis will impact these records and leave the buyers with some pointed questions. It is in the best interest of owners to maintain a real-time record of every business decision that could impact the future of the company. It’s important that owners not try to rely on their memory and that they include things like the rationale behind the action and its expected outcome. Types of events and decisions to document include financial, customers, marketing, suppliers, employees, products & services, and strategic. When it comes time to list your business, your business broker can help you to tell your unique story, which will rely on accurate logs from this fragile time.
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