NuVescor President Randy Rua highlights successful recovery strategies used by businesses after the events of 2020 and what to do if you need to sell your business but your financial performance hasn’t fully recovered.

1) Steps businesses have taken to recover from the events of 2020.
Businesses that recovered well after the pandemic were those that did not solely rely on PPP money to cover their losses but instead raised their prices and streamlined their costs. Companies that waited to raise their prices and/or cut expenses until after their PPP money ran out now have two years of poor financial performance and weak current financial performance, making it difficult to sell their business for a good price. Businesses that used PPP money for investments like equipment and expansion fared better than those that only used it to cover costs or losses. In summary, businesses that acted like they didn’t receive PPP money and made necessary adjustments to strengthen their financial health recovered better than those that did not.

2) The metrics used by buyers to determine your business value. Buyers are now focusing on comparing pre-COVID key metrics to current key metrics such as gross margin, labor cost percentage of sales, and year-over-year growth rate to understand how well the business has recovered. While EBITDA for the last three years remains important, buyers are now placing more emphasis on current performance and future projections due to the volatility of the past few years.

3) The recent downturn in financial performance has increased buyer demand for profitable companies. Due to the pandemic, half of the companies listed for sale are distressed or potential turnaround opportunities. Strong companies are now receiving a significant amount of attention from buyers since they are fewer in number.

4) How to address buyer concerns about recent financial performance. To sell a business that has poor financial performance, it is important to show buyers a clear path to improvement, such as increasing pricing, cutting costs, or investing in new equipment. If a buyer cannot see a way to improve financial performance through implementing improvements, they are unlikely to purchase the business. It is also essential to find a buyer with the necessary skills, resources, and abilities to make the necessary changes. Finding this buyer is crucial to selling your business if you don’t have strong financial performance.

5) The factors that potential buyers look at when evaluating a business have changed post-pandemic. Buyers used to be fixated on a company’s EBITDA performance over the last three years. However, due to the pandemic, they are now looking at a company’s current profitability, cost metrics, and market demand to understand its potential for improvement. For performing companies, buyers are looking at the EBITDA for the last twelve months as the primary factor to determine the company’s value.

In the current market, it is not necessary to wait until 2024 or 2025 to have three good years of numbers to sell. Due to the pandemic, there are fewer good businesses on the market, so if a company is currently performing well, it is recommended that they consider selling now.

Companies that are not doing well need to make changes quickly or find a partner that can help them. NuVescor can assist in selling to a buyer who can make the necessary changes to get back to solid financial performance. The market is volatile, and to transition a business successfully extensive research to determine value and find the right buyer match is crucial.

If you need help with selling your business, NuVescor can help. Click here to get in touch with us.

Opting to sell your business during bankruptcy can enhance your ability to maximize the return for your creditors while potentially securing proceeds, as the company retains a value over its liquidation price to interested buyers. By collaborating with M&A firms to identify investors who perceive a higher value in your business, you may also improve your chances of obtaining bank support, as you demonstrate efforts to maximize the recovery of funds. Selling a business while in bankruptcy can be a complex process. However, it is possible to achieve a successful sale when you follow the following advice from our company President, Randy Rua.

Opting for bankruptcy paves the way for a revitalizing fresh start, providing an opportunity for a new buyer to revitalize the venture. They are able to acquire valuable assets, seize a loyal customer base, and seamlessly continue operations – all while shaking off any burdensome liabilities.

1) Work with a bankruptcy lawyer. Find an experienced lawyer to help you navigate the complex court approval process, and ensure a smooth and efficient sale, from initiation to completion.

2) Get a valuation of your business. Consult with an M&A firm to discover the value of your customer base and contracts, considering their potential worth to buyers. Additionally, prioritize appraisals on equipment and real estate, and recognize the significance of employees as valuable assets in the valuation process. A lot of buyers are willing to buy a bankrupt company because they get access to the employees and customer and vendor relationships an acquisition versus having to build from scratch. These things can have significant value to the right buyer.

3) Be informed of the two primary methods in bankruptcy to disclose information to prospective buyers. In a private party transaction, the court publicly reveals the agreed-upon terms after approval, thereby informing all potential creditors. The other method, the stalking horse process, involves a primary bidder submitting a purchase proposal, which becomes public for others to potentially outbid. To compensate the stalking horse bidder for their efforts, they receive a fee if someone outbids them in the end.

4) Work with an M&A firm that understands how to market your business. Find someone to translate the value of your business’s intangible and tangible assets to the market by effectively communicating your business’s worth and showcasing its unique strengths in the market.

5) Be prepared for this process to move quickly. You will need to give the bankruptcy court a timeline, and the goal is to have it done as fast as possible. An average sale of a company can take up to a year, but under these circumstances, it is better to move swiftly and target 60 to 90 days. Having an M&A firm that knows how to build a good data room and collect the information the buyers are looking for to have it ready to go helps move the process along and cut back on the back and forth. Furthermore, having all the purchase documents ready at the beginning greatly speeds up the process.

6) Choose to continue operating your business. The optimal scenario for a business encountering bankruptcy is to secure approval from the court to proceed with operations. This increases the company’s worth compared to a non-operational firm. The court may permit a limited time window, such as 90 days, for the company to find a buyer who can afford to keep it afloat, thus benefiting both parties involved. Navigating the delicate balance between operational continuity and potential value loss is crucial. Determine the timeline and weigh the potential financial setbacks of continuing, versus instantly ceasing operations.

7) Be prepared to answer questions. If your business is going bankrupt, be prepared to get the answers to the following questions to ensure the sale goes as seamlessly as possible.

1. What is the value of my business?
2. What are the assets and liabilities of my business?
3. What is the status of my bankruptcy proceeding?
4. What are the terms of the bankruptcy court’s approval for the sale?
5. Who are the potential buyers for my business?
6. What are the terms of the purchase agreement?
7. What are the tax implications of selling my business in bankruptcy?
8. How will the sale proceeds be distributed among creditors?
9. What are the risks associated with selling my business in bankruptcy?

Selling a business that is going bankrupt can be a daunting task, but it is not impossible. By following these tips, you can maximize the value of your business, find a suitable buyer, and ensure a smooth sale process. Remember to be transparent about your situation, find an M&A firm that is prepared to handle the sale of your business, and work quickly through the process. By taking the right steps, you can emerge from this experience with a sense of relief and the ability to move forward in your business and personal life.

If you need help with selling your business while in bankruptcy, NuVescor can help. Click here to get in touch with us.

GRAND RAPIDS, Mich. – March 8, 2023 – NuVescor Group is pleased to announce the successful sale of a specialized woodworking company to Shively Bros. Inc.

The woodworking company is experienced in dealing with even the most complicated kitchen remodeling and kitchen renovations. Its award-winning kitchen designs are regularly featured in local, regional and national publications. According to Chris Clarambeau, President of Shively Bros., “This was an opportunity for our company to expand into a new sector where we can bring our experience and distributor reach to a new set of clients. We are excited to add this capability and product offering to our portfolio as well as diversifying our customer base.”

Shively Bros., based in Flint, Mich., is a family of companies working collaboratively to improve its manufacturing customers’ operational efficiencies. Its six core areas of expertise are inventory management, supply chain management, engineering services, cutting tool preset and regrind management, gauge management and continuous improvement. Each Shively Bros. company plays a unique role, contributing its own specialty and expertise, to deliver a broad spectrum of high-quality products and solutions designed to increase their customers’ bottom lines.

Shively Bros. was founded in 1947 in Flint, and has grown steadily to now include 15 locations across five

U.S. states as well as Canada and Mexico. It currently serves more than 1,200 customers in a variety of market segments, including automotive, aerospace, medical instruments, food service, metal stamping and oil and gas.

Shively Bros. was assisted in the transaction by NuVescor Group.

About Shively Bros. Inc.

Shively Bros. Inc. is an employee-owned firm that consists of five companies: Shively Bros., Shively Supply, Shively Diversified Management Services, Shively Bros. Canada and Shively Bros. Mexico. For more information on Shively Bros., visit www.shivelybros.com.

About NuVescor Group

NuVescor Group, based in the Midwest, is a distinguished mergers & acquisitions service company that has served the manufacturing industry since 2007. The employees of NuVescor possess the full array of disciplines needed to complete successful and timely business transactions. NuVescor utilizes a proprietary proven process that greatly increases the success rates for business transactions as well as the customer experience. For more information about NuVescor, visit www.nuvescor.com.

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