But could the global pandemic also bring opportunity?
From a deals perspective, unknown unknowns cannot be factored into an evaluation, but known unknowns can certainly kill-off, derail or cause significant delay. During periods in economic uncertainty many investors and lenders will simply sit on their hands, watch, wait and see.
In the current climate, Government initiatives can only go so far and be extended for so long before economics take hold and certain sectors severely impacted will take years to recover. However, even for those sectors most affected by the pandemic, such as hospitality and leisure, deals are still being completed, whether as a result of restructuring or an emergent opportunity.
There will be new opportunities and ultimately winners and losers as a result of the pandemic. It is known that periods of economic uncertainty can present some of the best returns for investors. However, whilst this can be the case, it is also true that opportunistic opportunities may yet falter, and ‘caution’ should be the prevailing theme during periods of market flux.
For sponsor backed deals, enormous effort goes into understanding the target’s market, and a core part of this is considering how ‘robust’ a business would be in a downturn or recession. It can be the deciding factor on moving forward with an investment, even when the economy is buoyant.
So where does this leave owners seeking an exit or needing a cash injection?
This very much depends on your business and how it is being impacted by the pandemic, and this needs to be considered in the context of its financial performance and future stability during a period of market uncertainty.
In the latest issue of Prosper, our flagship magazine, we take a look at the different options available, depending on where your business sits in the market.
Even though we are in an economic downturn which creates a high level of uncertainty, the option of going to market could still present an opportunity. The value and objectives you want for your business is not just about having an attractive business with supportive market dynamics, but also on the timing of when to take your business to market. Bringing an adviser on board early enables discussion around your exit planning considering both the shareholders and the company’s long-term objectives.
The next step
UHY can assist you with this thinking and your exit options whilst taking into consideration business value, tax planning and the necessary business preparation. We can also assist in identifying potential buyers, keep you informed of the market conditions and build relationships with potential interested parties to ensure you achieve the optimal result. If you are considering your exit strategy, please contact us to arrange a confidential discussion to discuss your options.
