If you’ve been eyeing retirement, the COVID-19 pandemic may have put a wrench in your dreams for the future. Perhaps you still want to sell, but are uncertain how the pandemic will affect the process. As with any other transaction, timing is everything. Here are four questions to ask yourself that can help guide your decision:
Why do you want to sell?
Whether you targeted 2020 in advance or just now decided to sell, consider your fundamental reason for exiting your business. Are you tired? In debt? Ready to retire? Struggling with your health? Investors want to know that your reason for leaving is not tied to the health of the business. If it is, staying in place and growing value to the greatest possible extent may be the healthiest option for your business and your long-term financial future.
Would delaying a sale help or hinder value?
Industries are constantly shifting. Consider how the pandemic has revolutionized telehealth and other remote services while nearly destroying many restaurants. Which direction is your industry moving? If there’s a chance to grow value now, consider delaying the sale. But if you’re already in trouble and there are no opportunities for growth, you may be better off getting out before things get worse.
Will waiting change the conditions of the sale?
If you’re leaning toward going forward with the sale, you might need to change your expectations based on the very real changes the pandemic has wrought. Buyers are more risk-averse than before, and now want to structure deals to pay the largest sum at a future date as an earnout. That significantly adds to the risk you undertake. If you wait to sell, you may be able to get more favorable terms that offer more security.
Are you fully prepared to sell?
Some owners are eager to sell their businesses, while others feel reluctant. You must be both operationally and emotionally prepared. That means you’re ready to part with the company, have trained your team to run it in your absence, and have exceptionally well-kept books.
This is where the right advisory team comes into play. Your advisor can help you get ready to sell the business, set your expectations in terms of value and deal terms, and help oversee the process Many owners think they can’t afford an advisor. The truth is you can’t afford not to hire one, especially during a high-stakes pandemic. Don’t go it alone. An expert can help you determine if now is the right time to sell, then ensure you sell for the best possible terms and price.
About Vision Point Capital
For over 20 years, our team has supported our clients with comprehensive advisory services to help them with their complex business valuation and transition needs. Few other firms offer such a complete suite of business transition services as it relates to M&A, Valuation, and ESOPs.
Our client’s personal goals are at the heart of everything we do. We are well versed in advising clients across a broad range of industries and help them manage and navigate valuation and all the business transition alternatives available to them. In fact, when you work with Vision Point Capital, you leverage our resources, experience, and expertise to help you grow faster and optimize value for reaching a successful business transition.