The Corona Year 2020 did not only have losers. If you want to buy a webcam today, you will either not get one or have to wait 3 months for it. Medical products also had their hype, as did construction tradesmen. One of my clients is on track for a record year with his heating and plumbing business. Of course, this is creating a lot of confidence, which is clearly boosting the upcoming sale to an investor.
With the appropriate capital structure, companies become more resilient to crises
In addition to these corona winners or those that are now simply in a tailwind due to their sector, there are also crisis-ridden companies that are fundamentally profitable and strategically well positioned. Their problem often lies in a capital structure that is unsuitable for crises, but which still gives them a good chance of a fair purchase price. After all, the business model works and will continue to do its job in the future.
Basics webinar presented by Nils Koerber
Company sale (M&A) without risk and loss of value
Of course, those whose turnover has been lost due to the lockdown and who hardly have a chance to make up for it have been hit particularly hard. The entire catering sector, fitness studios, etc.? ? People have not saved up their hunger and very few will register at two studios to make up for the missed training.
A significant shakeout among the companies
As we know from first-hand experience, the banks are looking in particular at the years 2018 and 2019. If there was already a crisis in the annual financial statements, it will be very difficult to get the necessary liquidity injection.
The cheap money of the last few years has of course ? according to ex-bank consultant and author Markus Krall ? created more, as he calls them, zombie companies ? than an economy can actually bear. He talks about a natural 1.5% of companies dropping out of competition every year. This figure has risen to about 15% in recent years. 15% of companies that are still on the market only because of cheap liquidity.
Giso Weyand ? the well-known consultant to the consultants says harshly: ‘Whoever is cut as a consultant now was not relevant enough’. In principle, this applies to every company and this Corona crisis is certainly a caesura of a special kind that makes the relevance of the individual players in the market very clear.
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TIPS for further reading:
Corona, Company Sale & Now Part 1
Selling construction companies - is it worth it in the construction boom?
Selling a company in the IT industry
Is business succession an opportunity for founders?
The cooperative model - when employees follow in the footsteps of the company founders!
