Welcome to the second live episode of The Deal Board Podcast! Today Andy and Jessica are talking about what is the business world going to look like after COVID-19, in regard to valuations, buyers, sellers, advisors, and also the banks. COVID-19 is going to affect valuations and Andy and Jessica are sharing three different options based on different case scenarios. There will be challenges and opportunities for business owners and buyers, listen to this episode, and get ready for the near future.
Listing of the week: Steve Wright (Raleigh). Great business to invest during COVID-19 times! Bakery and cafe. SBA approved. Annual revenue: $700,000. SDE: $211,000. Grown by 21% since the pandemic started. Listing price: $695,000. Visit tworld.com/raleigh or call Steve at (919) 603-4027.
Key takeaways:
[1:39] Quick overview of how businesses are valued.
[2:45] The market method.
[4:33] EBITDA valuations.
[4:45] SDE valuations, what does it mean, and what is included in this business.
[7:09] Recasting processes are meant to normalize businesses.
[9:22] How COVID-19 is going to affect valuations.
[9:52] The case of restaurant owners.
[10:26] Option 1: The V Shape. The case if business reactivates very quickly increasing revenues at the same pace.
[11:11] Valuations might look different in different regions.
[12:10] Valuators might ignore the COVID-19 period and only base valuations on "normal" times.
[13:49] The case of the businesses that are spiking in their sales during the pandemic.
[16:48] Option 2: What is expected to happen to valuations if there is a hangover or the nation enters a recession.
[19:30] Lots of business might be up for sale after COVID-19.
[20:08] The possible issue with the SBA loans.
[22:40] Banks want to lend money through the 7(a) program.
[24:00] Andy talks about the business opportunities that are arising currently.
[24:38] Quantity and quality of earnings.
[25:27] Option 3: What happens if prices go up for certain businesses post-COVID-19?
[28:49] Jessica gives suggestions for businesses to cope with the crisis.
[29:23] What are the options and opportunities for restaurants?
[30:58] The business is calculated based on a percentage of their assets.
[35:37] The difference between this economic crisis and previous ones is that this time is worldwide; everyone is on the same boat.
[36:20] The future will look different for all of us.
[39:25] Andy and Jessica receive questions from the audience.
[43:25] There is a trend about supporting small businesses.
[52:51] Deal of the week: Nathan Willis (Denver, Colorado). Agricultural Manufacturing business. The seller was a multigenerational rancher who created a product that has been selling for the last three years. Revenue: $500,000 per year. SDE: $250,000. Price $500,000 and sold for a full cash offer.
[56:08] Listing of the week: Steve Wright (Raleigh). Great business to invest during COVID-19 times! Bakery and cafe. SBA approved. Annual revenue: $700,000. SDE: $211,000. Grown by 21% since the pandemic started. Listing price: $695,000.
Mentioned in this Episode:
The Deal Board Podcast
United Franchise Group
Transworld Business Advisors
Transworld on Linkedin
Transworld on Facebook
Call us — (888) 711-9018
Email us thedealboard@tworld.com
The Deal Board Podcast Episodes 4 and 5 on Valuation and Recasting
Get Your Business Survival Guide — Transworld Business Advisors
Never Split The Difference: Negotiating As If Your Life Depended On It, by Chriss Voss
Call Nathan Willis at (303)335-7126 or email nathan@tworlddenver.com
Visit tworld.com/raleigh or call Steve Wright at (919) 603-4027
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