Under normal circumstances, the transfer of a company is already a delicate operation. It is therefore necessary to question the appropriateness of such a transfer during a global pandemic. Indeed, the economy of our country is strongly impacted by the pandemic we are experiencing and the inherent confinements. The transfer of companies has several aspects that must be taken into account.
Financing
This is the key step in the process of transferring a business. It requires the use of a banking institution. It so happens that banks are currently more concerned with the PGE (State Guaranteed Loan). This loan is granted to a professional or to a company by his usual banking institution, despite the current great economic uncertainty, via a guarantee of the State.
We are currently seeing a significant reluctance on the part of banks to grant acquisition loans, even on relatively solid files in traditionally robust sectors.
Company valuation
Already fiercely debated in normal times, the price of the sale of a company in the post-Covid period is inevitably impacted by the great uncertainty relating to the economic outlook in the short, medium and long term. Various mechanisms, such as the earn-out (clause obliging the buyer to pay an additional price to the seller) or the gradual transfer, facilitate the terms of negotiations and reassure buyers and financiers about the value of the company to be transferred.
Disposal of a company little (or not) affected by the pandemic
The consequences of the pandemic, being a cyclical and not a structural crisis, are likely to be limited to the containment period with a quasi-normal recovery thereafter and, therefore, to have little impact on the terms of disposal.
However, the transferor will have to be able to prove this to avoid the purchaser using the Covid banner as a negotiating lever on the transfer price.
On the other hand, we must also take into account the consequences of the pandemic on potential buyer profiles, such as companies seeking external growth. Indeed, their cash flow has inevitably been affected by the crisis, leading to caution in negotiations and even a reduction in the ambition of their growth projects in the coming months.
Disposal of a business affected by the pandemic
Each company is necessarily unique and, as a result, so are the situations encountered. For some companies, the health crisis has impacted their structural ratios, while in others, the human factor will have been greatly tested or, again, it is the sector of activity that is experiencing difficulties.
In these cases and in other situations, it is essential that the entrepreneur determine his main objectives and their order of priority around a few structuring questions: Does he want a quick sale? A sale at the right price? A sale that preserves jobs and the company's strategy?
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