Covid effect on results
July 13, 2021
by a searcher from INSEAD in Warsaw, Poland
How to deal with company results that were affected by covid? Would you consider such a company transactional and if so how to normalise for covid effect? Same question would apply to multiples in industries that were affected by covid
from Northeastern University in Boston, MA, USA
1. Once the pandemic and ensuing lockdowns took place, what actions did you take to ensure your business survives? These should include all areas of the business:
Strategic Goals (in-store versus online sales for example)
Marketing (digital (SEO, email, social, website) and print/radio (if any)
Purchasing (adding/trimming vendors, product lines categories, etc.)
Costs controls (changes to staffing, overhead, operating hours, etc.)
2. Compare your results March 1, 2021 to Feb 28, 2020 versus March 1, 2020 to Feb 28, 2019 (using QuickBooks or similar bookkeeping is fine)
Revenues ($ and % change)
Net Operating Profits ($ and % change)
Staffing Headcount/workhours
Other metrics (social media followers, mentions in other media, awards/accolades), etc.)
3. What are your business transition goals and why?
4. Define your ideal buyer?
Who are they? (A regional competitor, someone else in Canada or the US, or employees?)
Why would they want your business as it is today? (Realistic opportunities for growth, how the business helps customers, how the business helps your community, etc.)
from The University of Chicago in Chicago, IL, USA
1) Food Service business: Almost closed. Hanging in. Buyers not interested.
2) Boutique Meetings B2B service business: Sales went down to zero, Just now slowly getting recovering, expect back to normal in next###-###-#### months. Owner downsized, reduced capacity and overhead.. Now almost under LOI at reduced price b/c capacity has reduced.
3) B2B Service: Business did not suffer in###-###-#### We decided not to go to market b/c we knew buyers were not ready. Now under LOI at full price.
4) Mfg-1: On###-###-#### last year, we were about to close. All agreements were signed and wiring instructions with lender. Buyer said No due to Covid-19. Sales in Q2-2020 were down 25%. Profit down more. Recovery starting Q3. No loss of customers. Business is back to earlier levels last two quarters. We have LOI at higher price.
As others have said, "it depends". Overall M&A volume has decreased, but still material.