20 May Around the Web: A Week in Summary
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A recent article from Inc. entitled “How Change Offers New Opportunity for Buying a Business, During and After Covid-19” discusses how interest rates, SBA loan program changes, and other current conditions are presenting big opportunities for buyers.
Interest rates have dropped to historic lows in response to the economic conditions brought on by the Coronavirus. In addition, the Cares Act introduced a debt relief program which subsidizes the first six months of principal, interest and fees on SBA loans. These factors bring huge savings for buyers.
Businesses available for sale may be in a variety of situations. Some owners may simply need to sell and opt for an asset sale which can be a more simple process for the seller and buyer. Some businesses, especially those that are essential, are doing well. And others have positioned themselves for post-pandemic growth opportunities. This all adds up to a variety of options for buyers.
A recent op-ed from CNBC entitled “How to sell your business and retire during the coronavirus pandemic” discusses what business owners that would like to sell are facing and how they can position themselves for a successful sale.
The Coronavirus pandemic has put businesses in a variety of positions. Some essential businesses have seen an increase in sales, resulting in increased value and demand. On the other end of the spectrum, some businesses have been forced to drastically reduce their operations and must make a plan to reopen and position for a sale.
The author, an experienced business broker, offers the following recommendations to prepare for a sale in the next year or two:
- Get clear on your overall goals
- Clean up your financial practices
- Identify risk factors that could derail a sale
- Battle-test your operations
A recent article from Axial entitled “Corp Dev and COVID: What 3 Deal Pipelines Look Like Now” checks in with corporate development professionals at strategic acquirers to see how COVID-19 has impacted their activities and plans.
Isaac Lund of National Express explains that they are primarily in a holding pattern with a decrease in demand for their services. Deal-making has also slowed as they wait to see how the current situation progresses. However, they are looking towards signs of recovery which will help get deal-making back on track.
Craig Rodwogin of NAES Corporation discusses how they are an essential service and continuing operations. As an essential business, they are not seeing large delays in deal-making. Minor delays are expected to last only a couple of months. Replenishing the pipeline has become more challenging, however.
Monte Salsman of Winsupply explains that their numbers are down a bit, but not a lot because all of their businesses are essential. One large deal was completed during the pandemic, and the rest have been put on pause until there is a better sense of how things will play out. They are also looking at how to approach sale prices and seller expectations.
A recent article from Axial entitled “Consumer M&A Activities & Opportunities — COVID-19 Virtual Roundtable” recaps the week 10 Axial virtual roundtable discussing the current state of consumer sector M&A.
Ten industry experts gathered virtually to discuss the following:
- Accessing relevant industry data
- What transactions are most likely to close in the second half of the year?
- Valuations when the new normal is not actually the new normal
- E-commerce and Amazon
- New-customer acquisition
- New hurdles for valuations
- Getting a deal done
- Transaction structures and risk sharing
- Due diligence considerations
- Government loan programs
- Distribution channels
- The virtual deal process
- Grocery stores