Now that we have been living with COVID-19 and its social and economic ramifications for approximately two months, it appears that we, as an economy, are starting to adjust and get back to business, albeit, somewhat differently. For those of you who lost a loved one or friend, we extend our condolences and understand that the health danger is not over and there will be more casualties from the virus. There will also be businesses that have been mandated to close that will not have the capital to reopen and businesses that reopen that will not have the capital to wait for the economy to recover enough to return to profitability. Unfortunately, that means that there will be employees that will not have a job. Certain industries are faring better than others, and there will be a shift in the way business will be conducted going forward.
The business acquisition industry is also impacted. Fortunately, technology enables us to work remotely, in fact, I am writing this article from my home office. We are conducting more conference calls and “Zoom” type meetings, but we are getting to the point where buyers are becoming more comfortable that the economy is not going to collapse. They are writing offers, usually with some COVID caveat provisions, and scheduling trips to inspect the business and meet with management. The due diligence prior to submitting an offer is more intense and it is important for businesses that are on the market to have their financial house in order. It is critical in this environment to document the impact of the “safer at home” economy on the business and have a plan for going forward.
We believe that there will be exceptionally good opportunities for well capitalized buyers to acquire good businesses to grow and prosper, as a result of marginal businesses failing and creating a larger pool of qualified employees. If you have a good business, it might be the right time to sell because there is less competition from other companies on the market. If you are a buyer, you may also have less competition because of the less confident, risk adverse buyers watching from the sidelines. Having a strong advisory team will help you in this time of transition, and the team at The FBB Group, Ltd. would like the opportunity to earn your business.
Below is a link you might find helpful in regards to the CARES Act and how it may impact the purchase of a business.
(originally published in the May 2020 eNewsletter)