Business Lifestyle in The Age of Covid-19: Time to Reflect
It is said there are two certainties in life, death and taxes; now we must add Coronavirus. This new certainty will be with us for some time, and with it comes economic damage and a detrimental social impact, and part of that social impact may well be to examine what we want out of life. For certain, a consequence is to appreciate life more and perhaps enjoy the simpler things, trading the so-called ‘business lifestyle’ for a more conscientious appreciation for what else life has to offer.
Many owner-managers will think that because of a weaker economic or business performance that now will be a bad time to sell their companies, or that the last thing they should be thinking about is anything other than their business and its future, but is that actually true? I will be focusing on the business sale aspect from hereon in, but if you are interested in when ‘Enough is enough’ regarding the traditional business lifestyle path, Adii Pienaar has written a great piece on this that can be found here.
Is Now a Good Time to Sell?
Timing on a sale is said to be the key to the definition of good. With capital gains tax increases in the last budget and now an economic slow-down the answer must be no, it’s not a good time to sell, however, is it bad? The answer surprisingly is no, trade buyers remain under increasing pressure to change their business models and create scale, and Private Equity is literally over spilling with cash chasing too few deals. Private Equity may also be an excellent route to a partial sale, de-risk and bringing growth capital to your business.
There are buyers and options, yet there are too few quality companies coming to market. This may mean that buyers will be chasing you; Keynes‘ Law states that demand creates its own supply. The Covid pandemic is an extraordinary event that can be modelled against, so it is still entirely possible to present good numbers for a good deal.
Business Lifestyle and When Enough is Enough
Buyers will be mindful that there may well be value players, but also the strategy to gain economies exists with even more force in recessionary times. Buyers are thus active, have money and want to do deals. Yes, you will after the March budget probably pay more tax (20%) although there is the consideration that there may be a saving later on inheritance tax.
Many owners may well now be evaluating their options; take a loan to weather the pandemic storm and see the next cycle out (5 years?) or embrace the new certainties and still find the best deal for you. In this respect, we have the ‘title’ question when is enough, enough? Many entrepreneurs don’t seek advice on what numbers work directly for them. To this aim we have several key financial advisors who can help you, with just a little time invested in your ‘whole of life’ planning by answering the question, do you have enough to sell?
What do you need?
The three exit foundations when selling are your business and its strategy, your family and, thirdly, you as an individual. The pre-Covid business lifestyle of focus on constant business growth and expansion until you have reached retirement age and can bow out of the business gracefully and achieving your dream exit strategy has been flipped on its head. Some are selling far earlier than expected – either due to new, lucrative business opportunities being created due to the pandemic or due to its necessity – but what matters is your goals, your dream and whether you have achieved them.
Well, as an individual, why not find out your end goal, why not find out your number? Working with you and our financial advisory team we can without obligation create a clear plan as to when indeed enough is enough, helping you make the best decisions and exit timing for the company, family and you.