Like any other area of the economy, sale/purchase transactions of small/medium businesses have been affected by the changes caused by the coronavirus pandemic.
If before March 2020, the process of transferring a business from one owner to another was quite clear, the pandemic changed many of the variables involved in this process. For example, evaluating a company to establish a fair selling price considers the relevant economic indicators for the last years of activity. Still, the lockdown imposed this spring altered the values of EBITDA (Earnings Before Interest, Taxes, Depreciations, Amortization) or how to evaluate a business.
However, business transfer experts appreciate that their valuation could return to normal sometime this year, in the sense that most business sectors will restart and companies will resume their business and, therefore, their cash flow.
However, all this does not change the steps to follow in the organized process of how to sell your company:
- business analysis, preparation, goal setting
- strategy & material development
- identifying investors
- contracting negotiation
- transaction completion