The Peterborough Hub spoke to Eric Siecker, of Transworld Business Advisors, about what the business and sale market and process will look like in 2020 due to the impact of Covid-19.
The first point to make is that the business buyers and sellers generally have a long-term mindset (5+ years).
A seller may have already run their business for 20 years so their desire to retire and sell their business remains.
In fact, after enduring yet one more challenge, following previous financials crisis, recessions, etc., they may be even more motivated than ever to step away to enjoy retirement!
Buyers buy businesses for all kinds of reasons including the need for an income and a new career.
Often they are buying businesses for investment as part of a larger business model or as a way of growing that is easier/cheaper than trying to grow organically by hiring expensive sales people.
Again, for most people these dynamics will still be in place when things get back to normal.
Buyers buy businesses to generate future cash flow. If they can be confident that cash flow will get back to normal you are in a strong position.
And business sales can take a long time – on average a business sells in 8.2 months.
When the time comes to sign on the dotted line things will probably have returned to normal and everyone can be confident future cash flows will be solid.
Against that backdrop here are some pointers for you to start getting your business ready for sale.
1. Get a valuation to help decide if the timing is right financially.
2. Understand COVID related temporary anomalies in the financial results. A valuation should be based on normalized figures excluding one-off troughs or peaks.
3. Ensure you have accurate financial and legal records.
4. Cash-in-hand hurts valuations. Make sure you understand the impact of cash-in-hand when it comes to selling your business.