Strategy and M&A in the times of COVID-19
Part 2: Selling
For all of the dislocation and disruption the virus has caused, we know we will come out of it some day…and using the down time in your virtual office to plan can position yourself and your company to be prepared to execute on your strategy. That could mean buying, selling to standing pat (from an M&A perspective). In the last post , I covered buying, so in this post we’ll look at things from the perspective of a seller.
Similar to the buyer, the seller should review their strategy and consider whether their current process is likely to achieve desired results:
If there is currently an engaged buyer, evaluate if the offer continues to meet your needs:
Can they still offer the same level of compensation? Will they? Should they?
If stock / equity is part of the compensation, has the value of the equity changed?
Are the prospects / funding of the buyer still compelling? Will you and your team achieve your outcomes for this buyer?
How are they treating you and your team in the sale process through this volatility? Again, are these people the right partners for you? If people show you who they are, good or bad, believe them.
Don’t forget that nothing is final until it is final. Talk to your attorney about provisions in your deal for breakage – it may be a small price to pay in the long run.
If you are in the stage of the process where you are seeking a buyer, consider:
Should you be selling? Does a sale still match your short and long term business objectives?
Has your array of potential buyers changed? In other words, if you are looking at a strategic buyer as opposed to an equity partner, has the situation changed?
Does your current advisory partners still meet your needs?
Are there things you can be doing to re-position your offering memorandum to show how you can add value coming out of the virus down-time?
It is important to remember that these volatile days are not a “better” or “worse” time to sell. If you’ve done your homework and know the value of your company, you are well positioned to take advantage of any situation (increased equity holdings, better earnout opportunities, better transition terms, etc.).
The bottom line, as ever, is to know thyself and stay focused on the strategy of your business. Nobody knows it better than you.
At CorpDev Consulting, we can help you think about these questions. We have the experience to ask the right questions, both about your company and your potential acquirer. Give us a call if we can help.