Should You Sell Your Business During a Global Pandemic?

by Scott Danger, CPA, CVA

There’s no way around it: COVID has become our current reality. Although the recent news of vaccines is encouraging, it’s hard to say when life will truly return to normal. So, is now an ideal time to sell your business?

This might seem like an oddball question, but it’s one some business owners are asking—and for good reason. In an economic downturn, good companies tend to rise to the top. And good companies are always looking for other good companies to acquire. What’s more, buyers who are in the market right now have capital and interest rates are low.

In other words, selling your business in this time of COVID might not be the worst idea. That said, if you’re thinking of doing so, there are a few things to consider first.

How does COVID fit into your story?

When you put your business up for sale, it’s important to map out your story for potential buyers. Typically, this story would consist of two chapters: 1) How your business arrived at where it is today, and 2) where your business is headed in the future.

Now there’s a third chapter: How have you met the challenges associated with COVID, and how is your business stronger for it?

Yes, potential buyers will want to know about any improvements you’ve made in your business due to COVID, as these will continue to benefit your business when normalcy returns. For example, if you ran into supply chain issues earlier this year, what have you done to mitigate this risk in the future?

What does the future hold for your business?

Buyers are looking for long-term opportunities; COVID is a temporary situation. Buyers will want to see strong cash flow and low risk in your business—not just throughout 2020 but also projected for the coming years. If your company has these attributes, it will be more attractive in the marketplace.

On the other hand, if your revenue is declining and you don’t know when it’s going to turn around, now is probably not the time for you to sell. Instead, focus your efforts on increasing your cash flow and lowering your risk.

How will you rise to the top?

Whether you’re planning to sell your business or are simply trying to survive these challenging times, it’s important to keep moving forward. If you’re planning to sell, consider working with professionals who understand the challenges of COVID, so you can add a compelling third chapter to your story. And if you’re not, use this time as an opportunity to increase the value of your business, so you can rise to the top in the years to come.

Abdo’s M&A team is here to help you determine the right path forward for your business. Contact us today.