The coronavirus pandemic is like nothing we’ve ever experienced in our lifetime. A simultaneous public health crisis and economic catastrophe, it has hobbled most businesses in unprecedented ways, by suddenly evaporating demand in many industries.
And if you’re part of the cohort that owns your own business and you’re coming to the age when you’re thinking about what comes next, you may have a problem. The acquisition market has all but collapsed for now and, as in 2008, most owners will have to weather the economic storm to find the silver lining of pre-pandemic valuations.
Even if you could identify a qualified buyer, they are likely to be interested only at what might be called a pandemic penalty price. That is, they will value your company at a severely reduced price that reflects the new slower economy.
Further complicating things, third-party debt to finance these acquisitions is now harder to come by. Lenders are increasing the cost of capital due to a perceived higher risk from the pandemic, and in many cases are also making lending covenants more restrictive.
All of which makes it more difficult for you to derive fair value from your life’s work.
The Good News
We now have a buyout fund that helps retiring business owners with their valuation, liquidity and exit challenges.
We help small and medium-sized business owners develop succession plans that ensure that their families can access the wealth they’ve built and that the jobs they created for their communities remain. This option helps you preserve your legacy and either stay involved for as long as you like or exit with liquidity, all the while protecting your employees’ future.
We are looking to buy good companies that were performing well in their industry, pre-pandemic, even though their performance has since taken a hit by the crisis. And here’s the crucial point: If you have taken a hit from the pandemic, we will value your company by looking only at your pre-coronavirus performance. That means no pandemic penalty. If you have thrived during the crisis, we’ll also take that into account in valuing your company.
So if you have a sound company with 15 or more employees–even if you’re experiencing temporary financial upheaval in this current crisis—we would like to talk to you. Just give us a call at (216) 338-4468 or drop us an email at email@example.com to begin the conversation.