Selling Your Business During COVID
By Lexi Papa | March 10, 2021
If you’re thinking about selling your business, but aren’t sure if now is the right time, it may be helpful to think through the following questions:
1 – Is now a good time to sell my business? Depending on your company’s performance during COVID, the short answer is yes. We are seeing a robust appetite from buyers, both strategic and investors, who have dry powder to deploy. Businesses that are experiencing COVID tailwinds, or who are continuing to steadily perform, are arguably better positioned now more than ever for an exit. Areas of specific interest include buzzword sectors such as Cloud, E-commerce, Managed Services, and Cybersecurity.
7 Mile has advised on over 17 successfully closed transactions since April of 2020, and are continuing to see a strong interest from buyers across industries, including Business Services, Technology, Healthcare, Insurance, Consumer, and Industrial Automation. We would also note that the appetite from buyers is not focused purely on North America, as we have advised on numerous cross-border transactions in the past year and see a lot of investment thesis centered around Emerging Markets, including LatAm and Eastern Europe.
For more information on Emerging Markets, you may find the following podcast episodes useful:
*If your company’s financial performance has struggled significantly due to the pandemic, we suggest speaking with an M&A advisor so that they can assess your specific situation and help roadmap when an exit could be more timely.
2 – How are valuations during COVID? We are seeing strong multiples being paid for businesses that are performing well in the current COVID climate. Areas that are seeing especially high multiples are companies providing e-commerce services, managed services, managed security services, identity and access management, and SaaS products that can reduce overhead or that have a high growth rate (over 100% YoY) and are serving a trending market. For more information on this topic, view our recent Sectorwatch reports, or reach out to a 7MA advisor who can discuss your company’s valuation.
*Keep in mind that many factors can impact your company’s valuation, including scale, profitability, growth, and IP.
3 – How does 7 Mile’s transaction volume compare to other years? In an average year, 7 Mile would advise on 10 to 12 transactions. In 2020 we advised on 14 successful transactions, and as of March 15th, 2021 we have advised on six additional transactions and have five in due diligence. The majority of these transactions reflect our work on the sellside (advising the seller), and ranged across our key industry sectors. To support this increased deal volume we continue to scale our team and have added 8 new employees over the past year, ranging from Analyst to Vice President.
Based on our current pipeline we expect to see deal volume consistently increase and see a buyer network ready to support that activity.
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