Often the best way to predict the future is to look at the past—but sometimes there are extenuating circumstances that can pull part of the past out of consideration. Something like a global pandemic will be taken into account when analyzing a business.
A business owner just needs to show the reasons why the dip is simply a result of “one bad year” and not a sign of a business in trouble. After all, a buyer is investing in future cash flow and can overlook these anomalies and protect themselves when negotiating the deal. For the buyer to feel comfortable, a vendor can stand behind the evidence of “one bad year” by putting their money where their mouth is. For example, they can offer that a portion of the purchase price be paid over a period of time-based on future operating results.
The key is to have an experienced transaction advisor on the team in order to structure these complicated deals to ensure sellers achieve their target.
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