Like most of you, I’m sitting at home trying to make sense of our new COVID-19 reality, wondering how fast we'll recover from this insta-recession. I've been thinking about some of the business owners I've been working with, all of whom were in different stages of planning for their transition out of their business when the pandemic disrupted their plans. They're all are facing the question of whether they missed their window to sell the company.
I can't discuss actual clients, so here are four profiles reflective of the types of people I've worked with, and the scenarios many anxious business owners are facing right now.
Preparation Turned Standstill
We’ve been working with 'Dale,' a business owner in his early 60s, to create and execute a strategy to prepare his business for sale in a few years. Dale's business is in the travel industry, now at a standstill, and he's not sure when or if it can recover.
Close to Retirement
'Steve' is in his late 50s, has a profitable manufacturing business and has done a good job of reducing owner dependency. He wants to develop a succession plan and retire in the next three years. He's not sure if his kids, who are currently in college, will be ready to take over by then — or if they even want to.
Generational Transition, Interrupted
Don is in his 80s and wants to transition his business to his son, but is just now starting the process. Two years ago, he would have had multiple suitors had he wanted to sell, but his business is heavily concentrated with Boeing and now it is likely to be several years before the business can be sold at higher than fire-sale values.
Mid-Transition and Slowing
And finally, there’s Janice. Janice has a profitable business that is counter-cyclical and has really exploded with the economic downturn. She has an offer letter in place and the buyer is in the due diligence process. Unfortunately, the virus slowdown is dragging things out. Now Janice is wondering if she should keep her business and wait to sell until it has grown through this cycle.
Dale, Steve and Don are all wondering if they missed their window to sell. They're weighing the amount of effort it will take to weather this downturn, and are concerned about how long it will take. How do you think they would counsel Janice?
Opportunities Available to Sellers
There is good news for people who want to sell their business soon.
We expect this economic downturn to be short-lived, and now is a perfect time to do the behind-the-scenes preparation to bring a company to market. The fact is, there is still an enormous amount of private equity money that needs to be invested or returned to investors. There are still financial and strategic buyers looking for good companies to buy — right now.
There could very well be significant tax advantages to closing deals in 2020. What we don’t know is what the tax implications will be for the stimulus package — it will need to be paid for somehow. We also don’t know what the tax environment will look like for company owners in 2021.
If you
- Don’t have a clear succession plan
- Have been wondering what it will take to sell your business
- Do not want to ride another 2-5 years through another downturn and recovery
... give us a call, and let’s discuss your options.
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About the Author
John Kaminski, partner and managing director at OneAccord, has over 25 years' experience in sales and marketing. He began his sales career with Xerox and went on to work in the medical device industry prior to starting his own business. John has been recognized as a top performer at every company with which he has worked.
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