Selling a Business During the COVID-19 Pandemic: You Want to Sell, But Is It the Right Time?
With all that is going on, selling a business now is something you need to really think about. Here are four points to weigh to help you decide whether to go through with it – or not.


There is a popular saying about best laid plans often going astray. Business owners are experiencing firsthand the derailing of plans in this unprecedented and unpredictable 2020. Those with plans to market their business for sale this year are left particularly in a lurch. At a time when many industries are struggling — and some are unexpectedly booming — the decision to put a business on the market is more difficult than it was when the economy was predictable, or at least stable.
If you are a business owner looking to market your business, selling at the wrong time can mean potentially thousands or even millions of dollars in lost proceeds. Unfortunately, for many, 2020 and perhaps 2021 — who can say? — may be the wrong time to sell. While industries are being affected by the pandemic in wildly differing ways, the impact on most is negative, and the timing for an economic recovery is uncertain.
There are a number of issues to be considered and questions to be answered to help business owners determine when the time is right to sell. With the right answers, avoiding a bad decision may be the best one can hope for coming out of 2020.

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Why were you thinking about selling in the first place?
If you targeted calendar year 2020 as the year to market your business, consider what was driving your decision to sell in 2020. Are you ready to retire? Is a health situation affecting your ability to work? Is a new competitor bringing a product or service to market that will upend your business? Some of these factors are more time-critical than others. A health issue may require an immediate sale regardless of current market conditions, while a personal retirement plan can be more flexible. Perhaps your competitors are struggling, leaving better opportunities for your business.
The key takeaway is that you should revisit your motivation for marketing the business in 2020 and consider how that timing might be or should be impacted by the new COVID-influenced market. If you have determined, for example, that you want to sell now because of retirement plans, you have to consider whether your retirement planning is designed around what might be a reduced purchase price. You may wish to consider a delay in retirement in order to allow the business to recover value if the pandemic impact has been negative.
Would a delay in selling hurt – or help – the value of your business?
Industries become obsolete all the time, and the societal impacts of the pandemic are largely driving that process in 2020 for business sectors that never expected to encounter a significant market disruption. Among the notable developments, for example, is the rise of remote working that may outlast the pandemic, resulting in floors and floors of potentially unleasable office space. Thus, if you are the business owner, for instance, of Executive Desk Chair Outlet and you are already thinking of selling, waiting out the pandemic could be costly. On the other hand, if your business manufactures or distributes personal protective gear, it may be too soon to sell, as its value may increase greatly.
Every business owner who considers a sale of their business must undertake a financial analysis ahead of a potential transaction. Updating your financial forecast to account for the expected impact of the pandemic is especially critical. Business owners must factor in market conditions, the costs associated with the sale (fees for lawyers, accountants and the like) and how much they need to net from the sale, after taxes, in order to meet their financial needs for the years to come. If the business owner performs that analysis and determines he or she needs to receive top-of-the-market value for the business to meet their need, now may not be the time to sell if the pandemic’s impact on their business is predominately negative.
Will conditions of the sale change?
If your analysis prompts you to go forward with a sale, you may need to adjust your expectations, not only in the value of the business, but of how that value translates to purchase price. You may find that buyers are likewise wary of the future and hedge their bets by structuring deals so that the largest portion of the purchase price is paid at a future time in the form of an earn-out. There is risk to the business owner in this situation.
Earn-out payments are performance-based payments to the seller in the future based on achievement of certain financial goals, which may or may not be achievable. If the business is in an industry that has been negatively impacted by the pandemic, the risk is even higher.
Are you really ready to sell?
Some business owners are emotionally ready to sell their business before they are operationally ready to sell their business. Business owners should perform the proper diligence and address significant issues before putting their business on the market. Just as a house with faulty plumbing or ugly carpeting may not garner the best price, a business with poorly kept financial records, outdated equipment or risky employment practices likely will not be valued as highly as the business owner desires.
There are many tasks to be performed in order to effectively prepare a business to be marketed for sale. We’ll break down those and other considerations for business owners in part two of this series: Delaying Your Decision to Sell and Increasing Value.
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Patricia Farrell is a corporate law attorney in Pittsburgh. With a primary practice in business services, she regularly represents privately held businesses in mergers, acquisitions, divestitures and other major transactions, both in the United States and in Europe, Asia and Australia. She also has a broad corporate practice where she assists with corporate governance as well as succession planning for business owners and a variety of other day-to-day business issues.
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