| Successfully selling a company in any economic environment requires a deliberate, well-conceived process that defies short cuts. The plan to sell a company starts with a two- to three-month research and preparation phase that precedes the marketing of the company. The marketing phase typically takes four to six months. The due diligence, contract and closing phase can take another three to six months. As a consequence, estimating a closing date with confidence is very difficult. In most cases, the timing is based on long-term plans that are subject to any number of ups and downs that can occur at any point in the sale process. For example: · How will unexpected economic and market factors influence the process and the company’s value? · Who will be in the market? · Will the presence of the best-fit buyer coincide with company’s availability? · Will the buyer’s wants and needs match the market cycles? With those factors in mind, we should always be alert to situations in which short- and long-term market influences can depress value and marketability, making it prudent to postpone in order to achieve top dollar. Those delays tend to follow multi-year patterns, as we saw most vividly during and after the Great Recession. Nevertheless, we saw owners selling for less at that time because waiting four or five years was not an option for them. Enter COVID-19 As a current example of a market factor, we have been discussing internally, and with colleagues across the country, the potential effects of the coronavirus (COVID-19). The amount of time it will take for the effects of this issue to be felt, and the extent of those effects, vary greatly by industry. A company that depends on imports from China will be affected more than a company that manufactures domestically. Also, for a business with competition that relies on foreign supply, this might be a very good time to sell. As you can imagine, this is a volatile topic that sparks a wide range of opinion, ranging from “wait and see” to “act now,” to take advantage of anticipated government actions designed to help businesses. Some have advised accelerating the process so that their clients could get out ahead of the pack to minimize severe long- term effects. Consensus: Sellers Should “Stay the Course” The consensus, as of today, has been for sellers to stay the course with plans to sell, and to be active, not reactive. That is the recommendation we are making today to our clients and prospective clients. Our conclusion is to continue with our marketing plans and seek buyers as if there were no virus. Today, the pool of buyers is larger, and the abundance of money to be invested is substantial. These facts will not drastically change overnight. The sale and purchase of businesses will continue. Let us go out and see what responses we can get. A lack of response will force us to wait. We have no way of predicting what will really happen given today’s circumstances. Without a doubt, nothing will happen if we don’t try. As a seller, you have complete control over the acceptance or rejection of offers. We will continue to seek buyers until we find the right deal. As always, we are available to answer any questions. If you would like to meet to discuss these issues or go over the process, we will be happy to arrange a time that works for everyone. | 