3 Tips for Business Owners and Business Sellers – July 2020

3 Tips for Business Owners and Business Sellers – July 2020

Since the outbreak of Covid-19,  the business brokerage / investment banking world seems to change dramatically every 30 days.

As we enter the middle of summer, here are three tips we are giving business owners and business sellers:

 

1. After the 30 to 45 Day Shut-Down Starting in Mid-March, There is a Market Again  

But, banks and institutional lenders have gotten much more cautious, taking marginal buyers out of the market.

We are qualifying prospects more carefully so we do not risk wasting a lot of time on transactions that cannot be financed.

We do recommend that if you receive a good offer, take it seriously as it will be harder to obtain as many offers as before this started.

 

2. Run Your Business Like You are Going to Own It Forever Particularly During a Sale Process

Your best negotiation strategy is that you are making money and will keep running it if you must.  Be profitable every day.

Clearly, due to current circumstances, some businesses cannot do that.  They should not sell at this time unless they do not have a choice.   Unfortunately, there are going to be a lot of unavoidable bad outcomes due to Covid.

If your business is in the middle ground, make the tough choices and get pricing up if necessary. Always work toward having your costs in line with your likely revenues.

 

3. Good Companies will Attract Buyers

The discount you will need to give from your February 2020 price is going to depend on the uncertainty in your industry, your supply chain, your customer concentrations etc.

The sense of risk has been elevated.  How high that perceived risk is will vary from no perceived increase in risk with liquor stores to incredible going concern risk with high end sit down restaurants.

Most businesses are somewhere in the middle and it appears they can sell with price reductions that make sense compared to the increase in risk.  Buyers and sellers may consider forms of risk sharing through earn outs and the like.

If you would like to learn the value of your business as you make important decisions, please connect with us. We would be happy  to discuss your business’ market appeal.

 


Clients choose Harvest Business Advisors for our accurate business valuations and our proven ability to deliver the highest price in the smoothest sale transaction possible. Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

 

With Simple Adjustments, Harvest Continues Doing Business

With Simple Adjustments, Harvest Continues Doing Business

There is no denying that the Corona Virus Pandemic has dramatically changed the way we live and the way we do business. However, the Harvest Business team is encouraged that business transactions are continuing, although they are being handled slightly differently.

 

Case in point: Harvest Business Advisors Partner Richard Stopa recently held a buyer-seller meeting with seven people, with social distancing and other CDC recommended best practices incorporated.

 

A very interested buyer wished to meet with the owners of a Virginia accounting practice that Richard represents. The first inclination might have been to postpone the meeting or conduct the meeting virtually.

 

However, the buyer is eager to move the potential purchase of the business forward. Richard was happy to work out arrangements that helped the buyer learn more about the business and also gave everyone involved a degree of comfort in conducting a face to face meeting.

 

The meeting took place on a Saturday when the sellers’ employees were not in the office so as to maintain the confidentiality of the potential transaction and also reduce the number of people in one setting.

 

The buyer party and seller party, along with Richard, met in a very large open area of the sellers’ office where there was plenty of air circulating. All parties maintained proper social distancing (in this case actually 8 to 10 feet instead of the recommended 6-foot distance). We provided ample hand sanitizer, disinfecting wipes and other cleaning products. All parties, of course, wore face masks.

 

The only real difficulty was the limitations of the face masks. The parties couldn’t see each other’s entire faces (and expressions) and the masks muffled the conversation a bit, a minor inconvenience.

 

All told, the meeting was very positive. And the transaction will continue to move forward.

 

This meeting proved that business with our clients can be successfully conducted during a pandemic as long as all parties are cautious, flexible and open-minded.

 

Look for the transaction to be announced here in the near future.

 

And, if you would like to discuss any of the current business listings Harvest has posted or chat about listing your business for sale, we are ready to move forward with you.

 

This article was written by Richard Stopa, Harvest Business Advisors.


Clients choose Harvest Business Advisors for our accurate business valuations and our proven ability to deliver the highest price in the smoothest sale transaction possible. Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

CDC Releases Draft Guidance for Reopening Businesses, Restaurants, Bars

CDC Releases Draft Guidance for Reopening Businesses, Restaurants, Bars

The CDC has released draft guidelines for the President to review and approve outlining measures to be taken by businesses as they reopen.  Specific sections address businesses with Vulnerable Employees (page 10), Restaurants and Bars (page 12) , Child Care Centers, Schools and Day Camps, and Communities of Faith.

Click here for CDC Interim Guidance for Opening Businesses.

The guidance is very detailed outlining three phases.

Phase 1 suggests strict social distancing, closing common rooms like break rooms, telework, and other restrictions.

Phase 2 suggests moderate social distancing, shifts for common rooms, maintaining telework, etc.

Phase 3 is closer to the norm although limited social distancing is still suggested.

These guidelines are subject to change as there are many concerns about their work-ability.  Namely, can social distancing be maintained and other suggested requirements?  How are health checks performed while still maintaining required confidentiality? We are sure this will all be clarified over the next few weeks.

According to the Washington Post, the bulk of these guidelines are expected to go into effect sometime over the next seven days or so.

 


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

Articles and Data Relating to Your Business and Coronavirus

Articles and Data Relating to Your Business and Coronavirus

Harvest Business Advisors have created this collection of current articles that may be of interest to sellers, buyers, business owners and advisors relating to Coronavirus, industry and the economy.

We are always available to discuss how this might impact you, those close to you, and your business.

We hope you find these helpful.


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia.
Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

After the Covid-19 Shock, What’s Next for Your Business?

After the Covid-19 Shock, What’s Next for Your Business?

You have made the initial quick adjustments to your business to deal with coronavirus shutdowns and covid-19 shelter in place directives.  Hopefully your business is stabilized for now and everyone is safe.   But for most businesses the future is unlikely to look like the past.  For most business owners determining and preparing for changes as the ramp-up back from the coronavirus shut down begins is unclear.

How do you prepare your business, including your employees, customers, suppliers, and others for the future with all this uncertainty?

  • Business planning, strategy, and role playing after covid-19.  Develop a simple easy-to-adjust cash flow projection, key indicators, and bullet point improvement plan for the next 12 months. Overly complex projections will actually impede what needs to be understood.  A simple model that captures the big risks and rewards is perfect.  In the end you want to develop a few pages you actually use.   Run “Best”, “Likely” and “25% below the worst you can imagine” scenarios. Look at how to increase revenues and cut costs.  Work it through to staffing, possible renegotiations on fixed costs, etc.  Bounce this off trusted family members, key employees and advisors.  Talk about it with anyone with business sense you respect and trust that will work through it with you.  This will open up possibilities and solutions so as things happen (good and bad) you will have already given thought to many situations and can make decisions from a place of reason, not just emotion.
  • On a daily basis monitor sales, variable expenses, and cash (as necessary).  Revenues and cash flow are the equivalent of blood.  You must keep some in the business and stay focused on small day to day matters that improve business sales, reduce expenses, and protect business cash flow.
  • If possible, particularly for businesses with substantial contracts, keep your fingers on future sales. Stay in touch with key customers, key suppliers, and politely ask difficult questions essential to your survival.  Is the contract funded?  How will future payments be made?  How is timing of awards in the pipeline expected to change? Are suppliers able to perform?  etc.   For many contractors and others, status WILL change over time as your clients better understand how the response to coronavirus is affecting them and adjust.  Check at least monthly.  Check more if that makes sense.  Make tough decisions early.  Don’t delay.
  • Grow key people. Now is a time where they can shine.  How can you help them take the next steps in responsibility and decision making?  Adjust systems for virtual workers and actual volumes to keep control but not over-control.
  • Communicate and Lead. Leadership counts in times like these.  Covid-19 is scary particularly where many people are infected and ill.  What specific measures are your business instituting to keep people safe?  A communication vacuum allows fear to grow.  People want to know how they are going to come out of this crisis.  What is the plan today, tomorrow, and the next day.  They also realize plans are going to change as necessary.  Treat your employees like the adults they are.  Deliver bad news with empathy and include what is being done to overcome obstacles.

Planning sometimes seems like a silly thing in a crisis but it is your chance to work through options and generate ideas early.  Like the Boy Scouts always said, “Be Prepared”.   That is still very good advice.

We have communication, projection and cash flow tools and experience to assist you in your business planning and preparation. Should you be looking for guidance or support, please reach out.

Greg Caruso, JD, CPA, CVA  Partner, Harvest Business, LLC    |     609-664-7955  GCaruso@HarvestBusiness.com


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia.
Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

CARES Act – Benefits for Small Business Owners: Loans and Payroll Taxes

CARES Act – Benefits for Small Business Owners: Loans and Payroll Taxes

April 5, 2020

We wanted to share some of the reliable resources and information we’ve found most useful as we’ve researched the CARES Act for our clients.

The CARES (Coronavirus Aid, Relief, and Economic Security) Act was passed 3/27/2020. It is a $2.2 stimulus package t- You are likely getting multiple notices about it from multiple sources. Please work with your accountant and/or lender for information that is current and applicable to your particular situation.

For an overview please read this New  York Times article, “FAQ on Stimulus Checks, Unemployment and the Corona Virus Plan

In addition, we recommend The Small Business Owner’s Guide to the CARES Act from the US Senate Committee on Small Business Entrepreneurship

Paycheck Protection Program Loans

The Small Business Administration has detailed information about their Paycheck Protection Program – you can apply for amounts equal to 2½ months of average payroll.

The funds can be used for payroll, benefits, mortgage, rent, and utilities. Interest rates are capped at 4%, and the loans can be partially or fully forgiven if the business maintains certain employment levels.

While the loan program was expected to be live on Friday, April 3, we know that most banks are still putting the program in place. Most should be ready for your application business on Monday April 6. This specific program appears to be a first come, first served until the funds run out; don’t wait! Start today.

Reach out to your existing bank relationship first, many, if not all banks will process existing clients before accepting new applications.

Payroll Taxes

Businesses can generally defer payment of employment taxes in 2020, with half due by the end of 2021 and the other half by the end of 2022. Some companies severely affected by the coronavirus may be eligible for a credit to reduce those taxes. Please consult your financial advisor for details.

SBA Overview of Assistance: Provided by the Small Business Administration, this COVID-19 Relief for Small Businesses guide is comprehensive and current (as of today!) and an excellent resource to help see the big picture of Small Business assistance programs.

Bottom line:

  • Connect with your accountant and your bank.
  • Prepare your financials documentation, especially payroll documents.
  • Don’t delay – act as soon as possible.
  • But be patient – every one is learning and finding their way with this very new legislation.

There are sure to be revisions and new programs. Stay informed and stay healthy.

And we cannot emphasize this enough, if you would like to reach out to any of us to discuss these programs, we are happy to talk with you, share what we know and help you plan.

Greg Caruso (GCaruso@HarvestBusiness.com609-664-7955

Ed Davis (EDavis@HarvestBusiness.com301-325-7687

Richard Stopa (RStopa@HarvestBusiness.com703.307.1187


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia.
Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.