Merger and Acquisition activity is beginning to pick up as organizations who have planned well are poised to move forward. There is optimism on the horizon for many business owners both new and seasoned.
While so many have suffered and continue to struggle as a result of COVID-19, there is optimism on the horizon for many business owners both new and seasoned as states and businesses are beginning to re-open:
Key Reasons for Business Optimism
- Merger and Acquisition (M&A) activity is beginning to pick up as organizations who have planned well are poised to move forward.
- PPP Loan Forgiveness has created a more positive cash flow for some businesses than previously expected. This allows for growth, additional investment, and the ability to leverage acquisition opportunities or staff up and replace businesses that have failed.
- Some business owners, overwhelmed by the operational requirements of the “new normal,” are going to opt to exit now. This provides an opportunity for sale to those willing to make the commitment and who are enthusiastic about their own potential for growth.
- Many of the newly unemployed, underemployed, or underpaid, including those forced into early retirement, are looking for new business start-up and acquisition opportunities.
- Inspired individuals who wisely used their time to conceive of new business concepts that meet the needs of the “new normal” are starting up.
- Projects put on hold are in play again as lenders, builders, advisors, consultants, and employees are ready to forge ahead.
The Path Forward: Planning and Financials
As you are opening your doors to returning employees and embracing customers from a distance, it is nearing time to deliver on those ideas conceived in quarantine for resetting or even pivoting your business. Regardless of the path you take, careful planning and strong financials are going to be your ticket to the other side of this economic downturn.
Here Are Critical Financial Steps to Take:
- Re-Set Strategic Plans and Re-Work 2020 Projections. Most of what was conceived in 2019 needs to be revised to better reflect your current income, expenses, and projected tax liability. This must take into consideration expenses covered by PPP Loan Forgiveness but are no longer deductible, therefore increasing taxable income.
- Intentional Cash Flow Planning is more important than ever. Consider changing debt service, staffing levels, and the need to update cash retention policies in order to move forward with confidence.
- Timely and Accurate Financial Statements and Tax Returns will be critical for businesses who have taken a PPP loan. This will require accurate and detailed record keeping in order to receive loan forgiveness as well as to be positioned for what comes next.
Source: Provided by S.J. Gorowitz Accounting & Tax Services, P.C. Read more at SJGorowitz.com.