COVID-19-Weary Business Owners Can Win by Adopting the Right Mindset for a Sale
Your business has survived the pandemic, but it’s taken a toll. Here are some reasons why now may be a good time to sell, and some points to keep in mind to get a good price.


Faced with the demand to invest in upgrades needed to sell electric cars, a group of Cadillac dealers recently decided the economic uncertainty outweighed the likely future benefits. About 150 of GM’s 880 U.S. Cadillac dealerships instead took the company’s offer of a buyout of their franchises for the luxury brand.
It’s a decision that many small-business owners can relate to right now.
After a decade of relatively good times, the past year has been a rough financial and emotional ride for owners of thousands of privately owned businesses across a whole range of industries. Roughly one in five small businesses had closed as of last October, and many more are limping along with revenues at a fraction of their pre-pandemic levels.

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Why a Sale May Make Sense Right About Now
Many owners have been in survival mode for a year now, taking as much support as possible from government aid programs while scrambling to adapt their staffing and business model to the pandemic world. But as the smoke clears and the longer-term outlook becomes clearer, the option of selling the business and moving on is likely to be the most attractive and viable option for many owners.
That decision may partly stem from life-stage or health reasons. One in three U.S. small-business owners are over 65, and may understandably feel like they don’t have the time or energy to put into the post-COVID-19 recovery.
Some, like those Cadillac dealers, may be unwilling or ill-equipped to adapt to the wave of technological advances and shifting consumer behavior that have been accelerated by the pandemic and which are transforming industries across the board.
Anyone in the movie theater business should be worried not only about the plunge in revenues due to pandemic restrictions but about a more permanent shift by movie studios and consumers to online video platforms. Small brick-and-mortar retailers face an even bigger struggle to survive as the Amazon juggernaut has picked up pace during the pandemic.
While some small businesses will be able to ride out the crisis by adapting to these trends, many others run the risk of turning into zombie companies and facing bankruptcy. Unlike big public companies, their reliance on small groups of investors and bank lending usually doesn’t give them the luxury of capital to reinvent themselves.
Personal Hurdles Can Stand in the Way
A sale often makes the most sense, yet owners commonly struggle to adopt the right mindset to make that decision and follow through with it in a way that maximizes the return. Owners often have a lot of emotion and family identity tied up their business, making it hard to let go. If the business has been in a family for generations, it can be tough for an owner to accept the loss of control on his watch.
Emotion also tends to be a major obstacle when it comes to pricing a sale. Owners will often find it hard to accept a price that they don’t feel takes into account how well revenues were doing a year or two ago or how much family sweat equity has gone into the business over the years.
When this happens, it’s important for owners to take off their family hat and be as dispassionate as possible. The reality is that they can either sell at a time when they have some leverage or risk getting to the point where the terms are being imposed on them in the face of bankruptcy.
A Couple of Points in Sellers’ Favor
Rather than seeing the glass as half empty, there are grounds for seeing it as half full. The good news is that this isn’t 2008. There is plenty of capital out there looking for deals, which can put owners in a strong position if they approach the sale with the right mindset.
Consumer demand remains strong in many areas, and private equity firms are sitting on “a ton of dry powder” worth of capital they are keen to deploy in 2021. PE buyers are generally looking for businesses that they can scale up, make accretive relative to EBITDA and penetrate new markets.
To Get the Best Price, What Sellers Should Think About
Owners have options to appeal to what PE buyers want and walk away with the best deal possible.
- One way of doing that is to clean house before looking for a sale, picking the low-hanging fruit that will create some of the efficiencies that a buyer would implement anyway. That might involve replacing underperforming staff or closing unprofitable locations. The subsequent improvement in profitability can be annualized and result in a higher multiple for the sale.
- Or an owner could command a higher price by committing to help implement the buyer’s goals post-sale, perhaps by leveraging his or her extensive customer contacts or following through on a plan for costs cuts.
By putting themselves in the buyer’s shoes like this and letting go of their emotional baggage, owners can better leverage the value of their business and make the best of what may be a difficult situation.
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As the leader of the restructuring practice at Plante Moran, Tim Weed helps clients navigate changes in their businesses to improve operations and return to profitability. With expertise in cash flow projections, financial restructuring, profit improvement services, and more, clients look to him for guidance when facing difficult choices.
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