Business Sales in times of the Corona Virus - Mike Redman
Updated: Jun 15, 2020
I have been listening to a few speakers addressing the economic fall-out from the lockdown in which we, and the rest of the world have been obliged to undergo.
This is not to diminish in any way the tragic loss of life in New Zealand and more so, overseas which will have affected so many families and livelihoods. Our hearts and prayers are with all these families.
Nonetheless, we all need to now refocus our efforts to get the economy and our individual businesses going again, to prevent further damage to families and indeed loss of life which is an inescapable consequence during times of extreme economic distress.
There are undoubtedly some sectors of the economy which will be negatively affected for longer than others. For example, construction and manufacturing companies will be able to go back to work as early as next week, whilst restaurants, bars and cafes might only be able to reopen in plus 3 to 6 weeks’ time.
Under Alert Level 3, if your business does not rely on close physical contact, it can re-open as of 28th April 2020. If you are a retail operation for example, you could operate via your website, allowing customers to order and pay for items listed on your website. Such items can then be delivered.
Of course, if we move to Level 2 after several more weeks, then most businesses can open, and business premises can be open for staff and customers with "appropriate measures" in place.
So, I believe the ground in front of us is clear - start preparing now for opening your business - if you can - next week, and certainly by the middle to end of May 2020. Those companies who hit the ground running are going to be ones that survive. The right time is now in terms of developing detailed strategies to get back on your feet, to re-build your teams and to reach out to your client base. Play offense - this is the time to build market share. It is going to be the survival of the fittest. Now is the time your customer base needs you to reach out and energise them as well. Be ready and be confident.
Like myself, I am sure a lot of folk have been watching far too much overseas network TV, but one advantage is that one can keep up to date with the various treatment options that are being developed. Hydroxychloroquine, Azithromycin, Remdesivir, blood plasma transfusions, and even the deployment of the well-known polio vaccine are being trialled as we speak. Some of these have already been deployed and have proven very effective in some cases, not so in others. Once we develop more confidence in the range of treatment options this is going to greatly diffuse the level of concern that governments, health authorities and ordinary folk have in living with the Corona Virus. Very quickly, we are going to move out from the huge dark cloud that has been hanging over almost everyone, into the bright sunlight once again. Then it will be all systems go.
As far as business sales are concerned, for the sellers out there, remember this is a temporary hitch and will be over soon. Value that has been created in your business over the last so many years has not been lost, the future still looks bright. Importantly the pool of buyers will not have been overly affected; those with funds and a willingness to buy prior to Covid 19, will still be keen to spend and invest post Covid 19. There will always be a buyer - remember if the price is right, money is no problem.
For buyers, this may a great time to be active and to acquire a solid business. Cash is king (that also means the bank's cash!). If you are in that happy position start looking at the options. This is the time to get serious.
The question of value of course becomes exceptionally important. I can provide a likely sale value for your business or your client’s business using a variety of metrics and analytics - taking into account the lockdown and the effect it is going to have on your current year's performance. Just take some heart from the stock market. The Dow for example is now at around 80% of the value of stocks when the highs were reached in mid-February.
I would be happy to talk to you, or any of your clients on a no cost, no obligation basis at any time.
All the best, keep safe
Mike Redman Lic. REAA 2008
Cell: 021 722 342
Double Winkel Real Estate Limited
Business Sale Professionals