By: Attorney Andrew J. Steimle
Just about every business in the United States was impacted by the COVID-19 pandemic. But the world did not stop, and neither did business transactions. This article is intended to provide you with some additional items to consider when buying a business as we start to come out of the pandemic.
First and foremost, doing thorough due diligence has never been more important. The impact the pandemic had on companies ranges from severe distress to record setting profits. A key component of post-pandemic due diligence is that every buyer must be able to understand not only the financial performance of a business pre-pandemic, but the buyer now also needs to ascertain what direct impact the pandemic had (or continues to have) on the business. Was it just a one-time anomaly? Was it a “game-changer” that will forever impact the company’s performance? Was it something in-between?
What role did government programs (e.g., the Paycheck Protection Program, the Main Street Lending Program, etc.) play in the business? Are those grants or loans properly accounted for on the company’s financial statements? What remaining obligations exist relative to those programs?
Did the company lose key employees? What about key customers? Are the company’s key vendors still intact and functioning? Are there ongoing supply chain issues?
Pent up demand caused by the pandemic, executive/ownership fatigue arising from managing companies through the pandemic, along with the increased propensity of baby-boomers to sell their companies, will undoubtedly result in what many believe to be the greatest generational shift in ownership of privately held companies ever. Business transactions are predicted to soar in the coming years.
There are very good opportunities out there for the right people. Now is a great time to explore purchasing a company or product line. When you are ready, please make sure you work with experienced lawyers who regularly provide advice on buying or selling companies. It will make all the difference. The attorneys at Steimle Birschbach are ready to help you with your business purchase or sale. Straight talk, solid advice. That is our way of doing business.