The COVID-19 pandemic has made selling a business more complicated, but not impossible. Liquidity and low interest rates combine to create favorable conditions for sellers who can demonstrate that their business continues to be viable. Pay attention to tips on how to sell your business during COVID, and you can conclude a sale at a strong price with favorable terms.
Know Why You Want to Sell
It’s better if the pandemic is not the driving force for your decision to sell. Maybe the pandemic came along just as you were planning to retire anyway. Or perhaps you were already “burned out” and looking to pursue other business opportunities. If your business was not seriously affected by the pandemic, now is a great time to sell. If, however, your business was affected, and you have the will and the energy, you may want to re-invest and rebuild before you put your business on the market. Or, if you were already close to retirement, or you just don’t have the passion or the funds to rebuild, selling your business now, even at a somewhat distressed price, may be the best course.
Essential businesses, technology, online education, ecommerce, and delivery businesses are participating successfully in what may be a permanent change in the business landscape. But even if your business has suffered, don’t give up. Your business had value before and still does; your choice is to sell it now at a discount, or to reinvest, rebuild and do the work necessary to mitigate the damage the pandemic has done to a previously thriving business. Getting your business “back on track”, even at a lower run rate, will help prospective buyers gain a picture of what your business looks like in more “normal” times and will support a stronger price.
Be prepared to show the actions you took to adapt to the pandemic environment. Everything from remote customer service to adjusted product lines to reduced overhead from remote work may be relevant. Buyers will also want to know how you managed cashflow during this crisis. Document the steps you took to stay afloat and ahead on your balance sheet.
Just as you would in ordinary times, clean up your finances and address pending risks that could deter buyers. Slow-moving inventory, outsize debt, inordinate personal expenses, outdated operational and human resources practices, litigation, and a backlog of accounts receivable can deter buyers. A small investment in cleaning up these items can make a big difference in the price your business will command.
Work With Professionals
Now more than ever, a professional business broker can help you prepare your business for sale and both find and vet prospective buyers for you. A business broker will help you prepare the best and most accurate picture of your business’s value to present to potential buyers, taking the impact of the pandemic into consideration. Don’t limit your thinking to the local area only; for example, reputable business brokers in the Washington, DC, area will have contacts nationwide that can help identify serious buyers who want to enter the local market.
Selling a business is never easy or quick, but even during the COVID-19 pandemic, it is possible. Knowing how to sell your business during COVID means understanding that many of the ordinary considerations, like accurate valuation and historical performance, are still very relevant even taking the pandemic into account.