Do you know the COVID-19 impact on Mergers and Acquisitions (M&A)?
After all, an exit or liquidity event is your most important financial decision of a lifetime. You have one chance to get it right, and you better make sure it counts.
Even before COVID-19, the statistics for liquidity events weren’t great for business owners.
Up to 90% of liquidity events fail. Of the “successful” liquidity events, business owners leave 50% to 100% on the deal table.
Who am I, and how do I know?
I started my eLearning business after graduating from my MBA program. I had no money, experience, or team. The truth is I had no business being in business.
My saving grace was my grit and determination, which had me welcome success.
With success, I received a 7-figure offer from a bright and experienced buyer.
I said “no” to the 7-figure offer and “yes” to mastering the art and science of a liquidity event. Then, two years later, I said “yes” to a 9-figure offer from a different buyer.
Today, I pay it forward. I help business owners through the 90-day Deep Wealth Experience. At the heart of the Deep Wealth Experience is the exact 9-step roadmap that I created for my 9-figure exit.
How did I go from saying “no” to a 7-figure offer and “yes” to a 9-figure deal?
The 9-step roadmap of preparation was my saving grace. It’s the exact 9-step roadmap of preparation that can immunize you for the COVID-19 impact on M&A.
What can you do to capture not any deal but the best deal for your liquidity event?
Why Preparation Is Your Immunization Against The COVID-19 Impact On M&A
The time to repair the roof is when the sun is shining – John F. Kennedy
Do you know why preparation is your immunization against the COVID-19 impact on M&A?
The onset of COVID-19 on the world stage is an excellent example of not being able to time the market.
The COVID-19 impact on M&A in the early days was devastating as the markets all but shut down. And then something unexpected happened that nobody could have predicted.
The COVID-19 impact on M&A created a perfect storm for valuations in specific industries to be at all-time highs.
And here’s the takeaway. Businesses that were ready enjoyed a once-in-a-lifetime opportunity.
How did this happen?
The supply of businesses having liquidity events dwindles. Demand from buyers remained the same. As a result, enterprise value sky-rocketed.
Had you deployed the 9-step roadmap before COVID-19, you benefited in two key ways.
You found and removed the skeletons in the closet. You also found the hidden Rembrandts in the attic and put them out for public display.
Second, you leveraged the power of an auction to help you capture the best deal.
While other businesses focused on surviving, prepared companies thrived. It was the same prepared businesses that were the benefactor from the COVID-19 impact on M&A.
As the world adjusts to the new normal from COVID-19, the world of M&A has adapted.
Fast forward to today, and the COVID-10 impact on M&A has changed critical areas for a liquidity event.
Do you know what these key areas are and what you must do?
What You Need To Know About Due Diligence As A Result Of The COVID-19 Impact On M&A
Diligence is the mother of good fortune – Benjamin Disraeli
The COVID-19 impact on M&A has caused due diligence to become more challenging.
More than ever, buyers are doing everything possible to reduce their risk.
Preparation does two critical things. First, you create a blueprint to optimize enterprise value. Second, preparation gives you the certainty that you’ll capture the maximum value.
In the nine-step roadmap, step one is always looking at the big picture. The COVID-19 impact on M&A has affected three areas in due diligence:
- Supply and distribution chain risks
- Data privacy
- Reps and warranties
The power of the nine-step roadmap of preparation is your mastery of being able to both show and tell the buyer.
A masterful narrative tells the buyer how you’ve addressed a specific concern. The inclusion of facts, data, and case studies shows a buyer what you’re narrative says.
Your ability to both show and tell goes a long way to building trust with your future buyer. With trust comes deal certainty and an increase in enterprise value.
Today a data privacy report is a “nice to have.” Even before the COVID-19 impact on M&A, a data privacy report was becoming a “must have.”
Stay one step ahead of your buyer and have a data privacy report done by a third party today. You’ll thank yourself tomorrow as you find and remove data privacy skeletons.
When it comes to the COVID-19 impact on M&A, do you know the one area where you can thrive and prosper?
What You Must Do About Your Culture To Ensure You Thrive And Prosper
Show me your culture, and I’ll tell you your future – Jeffrey Feldberg
The COVID-19 impact on M&A goes beyond M&A when it comes to culture.
The combination of downtime and remote work is the genesis of The Great Resignation. Up to 60% of employees are thinking about quitting their jobs.
Employees are leaving long work hours, a tedious commute, and terrible bosses. Instead, employees are looking for fulfillment and quality of life.
A rich and thriving culture does two critical things for your business. First, you’re protected from The Great Resignation. Second, a rich and thriving culture has resilience at its core.
Resilience trumps resources.
Your competition and your future buyer can deploy their capital to copy what you’re doing. But what your competition and future buyer can’t buy is your culture.
Resilience promotes creativity and ingenuity that welcomes market disruptions and higher profits.
How can you boost your culture to immunize yourself against the COVID-19 impact on M&A?
Here are your five to thrive:
- Provide your management team with training and tools
- Connect your culture to your vision
- Embrace freelance talent
- Welcome remote work and flexible work arrangements
- Supercharge pay, promotions, and bonuses
Your mission is to create a culture that helps your business keep top talent and attract new talent.
Do you know the COVID-19 impact on M&A deal terms?
You should, but chances are you don’t.
What You Need To Know About The COVID-19 Impact On M&A Deal Terms
You don’t get what you deserve, you get what you earn – Tom Brands
The COVID-19 impact on M&A deal terms has forever changed three key areas.
The three key areas are:
As a result of the COVID-19 impact on M&A, buyers are more insistent on earnouts now than ever before.
How can you avoid an earnout even after the COVID-19 impact on M&A deal terms?
One word: preparation.
How do you prepare?
Enter the nine-step roadmap of preparation.
The power of preparation before your liquidity event has you do two things. First, find and remove the skeletons in your closet. Second, discover the hidden Rembrantds in the attic and put them out for public display.
Preparation gives you the narrative, data, and facts that remove risk. Combine preparation with an auction and you stack the odds in your favor for avoiding an earnout.
What about buyer financing and indemnities?
Enter your investment banker and M&A lawyer.
Step six of the nine-step roadmap does a deep dive on how to find and select the best advisors for your team.
The right investment banker and M&A lawyer help you navigate through the buyer’s requests. When it comes to financing and indemnities you must find the balance between risk and reward.
Once again, the power of an auction works in your favor. In an auction, your buyer knows you can walk from the deal table because you have choices.
The COVID-19 impact on M&A created a new deal term.
Do you know what this deal term is and how to approach it?
EBITDA-C: What You Need To Know
Every success story is a tale of constant adaption, revision and change – Richard Branson
The COVID-19 impact on M&A has forever changed the playing field. A new term resulted from COVID-19 called “EBITDA-C,” where the “C” stands for Covid.
What is EBITDA-C?
EBITDA-C signals to the buyer that COVID-19 changed your EBITDA for the worse. The thesis is that CVOID-19 is a once-in-a-lifetime occurrence. As a result, enterprise value should not go down.
Buyers have a mixed reaction to EBITDA-C. Some buyers accept EBITDA-C while others don’t.
Remember, buyers, want to remove as much risk from the deal as possible. The power of preparation allows you to both show and tell the buyer why EBITDA-C is legitimate.
Preparation has you create a narrative filled with data and facts to prove your point. Then, the right investment banker and the power of an auction give you further leverage.
What if your business did better as a result of COVID-19?
In an interesting twist, buyers may hold your COVID-19 success against you. It’s likely your buyer will insist that your EBITDA will go back to lower levels once COVID-19 is behind us.
What can you do?
Once again, the nine-step roadmap of preparation makes all the difference. Your mission is to show how your business will continue on its trajectory after COVID-19. Again, a case study with a powerful narrative works in your favor.
Both in life and business, there are no guarantees. It’s through preparation that you immunize yourself against the COVID-19 impact on M&A.
With this in mind, start your preparation today so you can thrive tomorrow.
The COVID-19 impact on M&A has forever changed the landscape. What worked yesterday in M&A will not work today.
The great news is that with thorough preparation, you can immunize your business. Look to preparation as both your ally and friend to help you capture the best deal instead of any deal.
Even before the COVID-19 impact on M&A, up to 90% of liquidity events failed. Insult to injury, business owners often leave 50% to over 100% of the deal value in the buyer’s pocket.
You now have five proven strategies to immunize you against the COVID-19 impact on M&A.
Each of the strategies has its foundation in the nine-step roadmap of preparation.
I created the nine-step roadmap in my liquidity event journey after I said “no” to a 7-figure offer. Two years later, I said “yes” to a 9-figure offer due to the 9-step roadmap.
It’s no coincidence that at the heart of the Deep Wealth Experience is the exact nine-step roadmap. Through the 90-day Deep Wealth Experience, I pay it forward and help business owners do two things.
First, protect you from being a statistic. Second, master the strategies that help you capture the maximum enterprise value.
What can you do, and where do you start?
Start with the first strategy and master it. Once done, move on to the next strategy. Before you know it, you have mastered all five strategies.
You can do it. I know you can.
Here’s to you and your success!
Your Biggest Raving Fan,