by John Howe, Director
After the Great Recession we found a lot of owners delaying selling so they could focus on rebuilding and growing profitability.
As we emerge from the Covid 19 shut downs, some may be fearing “oh no, I am stuck in the saddle again.”
We think there is reason to look at the horizon more positively. That involves taking action – either to formally plan and adjusting to improve salability or to put this period in perspective, explain how you survived and even thrived, and selling.
There are reasons this might be a good option.
Buyers are still in the market
Every day we receive emails and calls from buyer groups seeking acquisition opportunities. This has not stopped nor slowed down.
Buyers include companies seeking to grow through acquisition. Private equity funds continue seeking to add strength to portfolio companies they already own. Searchers are active pursuing the America dream – their own company.
This has not stopped. Demand is still there. And funding is still available.
Footnoting pandemic performance
Part of the process of selling involves putting a comprehensive financial picture together, and highlighting one-time events or special circumstances. Any business coming to market over the next year or so will need to tell the story, good or bad, about how they performed through the pandemic.
If we are retained to represent you, this will be covered in the information package and explore both the before and after performance.
Normalization recasts expenses that are one time in nature. In this case, virtually all businesses have been impacted so it will not be shocking to anyone looking at the financial package.
Some have actually seen revenue grow.
Should we hold or sell?
After the Great Recession many owners had to take a “one more year” attitude. The impact of that crisis was so great that even those approaching retirement age decided they had to wait.
But those same people are now at a crossroads again and have to decide how much longer they should wait.
Don’t avoid taking action
I believe entrepreneurs tend strongly toward optimism. After all, 19 times out of 20 when I talk to an owner about their projections, business is going to grow. It is not a bad attitude to have, especially when you consider the fortitude you need to run a business.
But that optimism is also why so many succumb to what we call "one-more-year-itis." That's the condition that leads owners to delay selling, even in an up M&A market, when the proceeds would more than fund their retirement.
Hopefully, this time owners will think strategically. Instead of waiting to hit a certain milestone age, or waiting for some trigger in their life, perhaps we'll see more planning to exit on their own terms.
Doing that means keeping tabs on your business value, creating a vision for your financial future, and selling when the numbers line up. We are ready when you are, and for many of you, this is probably the right time. Don’t wait for the next disruption to happen.
Business Transitions Strategies is a founding partner of Cornerstone International Alliance
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
Questions That Owners Consider
We have had many conversations with business owners in the lower mid-market who are unsure about the future and wonder whether they should sell or hold.
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Don’t Let the Pandemic Sideline Your Dreams
As we emerge from the Covid 19 shut downs, some may be fearing “oh no, I am stuck in the saddle again.” We think there is reason to look at the horizon more positively. That involves taking actio
Prepare for the Market Rebound
For many business owners, the economic effects of the COVID-19 pandemic have been devastating – especially for those who were planning to sell their businesses.
Using Downtime to Add Value
As business owners are working to process the impact of COVID-19, we’re looking at how it will affect M&A. The good news is that many companies and private equity firms have been doing well for year
Are Buyers Still in the Market?
We believe that mergers and acquisitions will continue once the current crisis ends...based on the volume of inquiries from private equity funds, search funds and well-funded individual buyers.
Use the Threat to Better Prepare
Today there is a lot of uncertainty about the future of business...there are things you can do to prepare for an eventual sale of your company– especially now.
Crisis Shows Ripple Effect of Business
Our focus at BTS is on small companies that are the backbone of the economy...This gives us exceptional insight into what it is like to be owner-operators.
Dealing with risks in a company sale
The passing last week of Harvard Business School professor Clayton Christensen – famous for his theory of business disruption - is a good time to consider business risk.
M&A Advisor Tip: Earnouts Can Break a Deadlock
Earnouts can be used to address a perception of risk faced by a buyer. They also are used to bridge a valuation gap between a buyer and a seller.
Precision Machining Company
Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
Green Product Company
Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
Water Purification Company and Young Buyers
Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?
Magnetics Company with High Profile Customers
(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.