Acquire a Small Business During COVID-19 and Pay It Forward
“Life’s most urgent question: What are you doing for others?” – Martin Luther King Jr.
In times of crises, there’s always a glimmer of positivity. Yes, the impact of COVID-19 has hit the economy pretty hard. Businesses are closing doors, employees are being furloughed, and there’s the looming prediction of one of the worst recessions in history. But, here’s the deal with history: every time things look bleak and there’s rising chaos, people step up—it’s when the magic happens. This pandemic is no different. As a business leader, if you were thinking of acquiring a company before COVID-19, you have even more reason to consider a merger or an acquisition now, during these turbulent times, because therein lies the opportunity to do good.
Corporate social responsibility (CSR) has taken a front seat in business for the last decade or so. Companies around the world have taken an interest in “doing well by doing good” and frankly, it's about time. While profit is usually at the forefront of any business transaction, companies have a moral and social responsibility to uplift the community that it belongs to, especially considering the large amount of power and resources it has access to.
COVID-19 presents an opportunity for you, as a business leader, to take charge and pay it forward by acquiring a small business that's struggling to survive during these tough times. You can do well by doing good, too. Seriously. Acquiring an established business gives you plenty of benefits:
First off, the product or service is already in the market. When you buy an existing business, you’ll already know of how the product or service is doing in the market. If it’s received well, the likelihood of building a successful business out of this acquisition is higher. If the product or service wasn’t received well in the market, at least the initial test run has already been done and you can jump straight to improvement strategies.
This is a chance for you to “pay it forward.” Think about it. This is a chance for you to give back to your community—you can save a local business that’s cherished by the people around you, or rescue a long-standing business that’s essentially a part of the neighbourhood’s history. You can save jobs and impact families. COVID-19 has affected businesses and families around the world, and a merger/acquisition gives you an opportunity to contribute to something positive.
It’s an easier way to expand into new markets. Say you’ve always wanted to have your hand in a specific industry. This is your chance to dip your toes into it without the hassle of setting up the business from scratch. You can expand your services into new markets or revise an existing one, essentially spreading your reach, by acquiring an already existing presence in the market.
You can hit the ground running. By that, we mean that you’ll be in a position to launch/start selling quickly. When the product or service is already in the market, you just have to pick things up where it was left off: employees will already be trained, protocols will be in place, there are existing relationships with suppliers etc. Sure, you may have to put in some work to turn things around, but it’s still significantly less than starting your own business from scratch.
You get an established, possibly beloved, brand. Launching a new brand isn’t easy, especially when you consider the time, creativity, effort, and money that goes into the marketing strategy. But, if you buy an established business, you’ll often inherit its brand and market share, which can save you considerable time and money. Better yet, you’ll save a business that’s loved by your community, its employees, and products. Just imagine how good it’ll feel to be the hero who saved a brand from being taken away from its loyal customers!
Get access to the existing customer base. By acquiring an established business, you get access to its existing customer database, including its loyal customers. If you were to launch your own start-up on the other hand, you’d have to struggle with making it known and spend considerable time and money on customer acquisition. With the benefit of an existing customer base where people already know about your brand, you’re just building up. It’s a significantly less consumption of your time and money.
Now, you may wonder what you gain by buying a struggling business. A distressed sale presents all parties with the opportunity to earn something out of the deal. On the side of goodwill, by buying a struggling business, you will be doing a service to the economy along with the employees of the business. Buying out the business will make their hard work, dedication and loyalty worthwhile, instead of just closing the doors. You’ll also be helping the families of these employees with survival.
But most of all, when you acquire a troubled business, remember that it is an opportunity. While everyone will tell you that it's a great opportunity for YOU (and it is), more importantly, apart from financial gain, you become a savior. This is an opportunity for you to help at a time when others are passing around bad news, be it a unit shutting down or a range of jobs becoming redundant. You, on the other hand, will be preventing this from happening! Additionally, right now the cost of an acquisition is significantly less than it was three months ago, so acquiring a small business is a win-win situation for both parties.
With decades of experience dealing with mergers and acquisitions, Evolve is seasoned in building trust and facilitating a mutually beneficial, smooth and successful transaction:
We will pre-screen suitable sellers for you.
We assist with due diligence to assure that the financial and operational information presented truly reflects the underlying sustainable value of the business including forecast analysis, quality of earnings and identifying cost savings opportunities, among others.
We will negotiate a winning price for your acquisition.
If you’re considering buying a business, we can help. Contact Evolve today to get started.