How are you analyzing 3 and 5 yr average financials with COVID impacts?

searcher profile

September 01, 2024

by a searcher from University of Aberdeen in Netherlands

Interested in how others are assessing prospects especially average financials with possible reductions in revenue in 2020/2021 and then a bounce back in###-###-#### Where government COVID grants have been issued (and often forgiven) do you include them in your adjustments?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I can tell you lenders are looking at it based on a market perspective. I also recommend to clients to request the 2018 and 2019 tax returns and/or financial statements if the business was substantially impacted by the pandemic and use that to help streamline what normalized operations look like. Although I would never advise anyone to rely on statements that old for buying, it can help put into perspective the impact of the pandemic.
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Reply by a searcher
in Baltimore, MD, USA
Grants and PPP loans should not be in the numbers when reviewing. My answer - the weighting by year all depends on the business / the market they are in and is a judgement call. Example - home improvement related businesses had a huge boost after COVID. In those scenarios, I would put much more weight on 2023 and 2024 YTD vs. '21 and '22.
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