Page 7 - NBIZ October 2020
P. 7

When you decide to sell your compa-  These disruptions likely result in lost   reduced or not incurred when deter-
        ny, it will be crucial to have accurately   EBITDA. Owners and their manage-  mining the normalized EBITDA.
        tracked your EBITDA and its changes   ment teams should track any business
        through these unusual and unprec-   disruptions and document the duration   Expenses to Support Remote Work
        edented times. Potential buyers will   and root causes to facilitate analysis of   Many businesses incur increased
        want to know how COVID-19 impacted   the company's financial results for the   expenses associated with the shift of
        your company's financial performance.   periods before and after the relevant   workforces from company facilities to
        They will also want to be able to clearly   shutdown. Additionally, they should   work-from-home (WFH) routines. Ex-
        and readily convert your company's   track operating expenses that were   amples of these costs include expenses
        financial results to show how the
        company likely would have performed
        during normal operations and market
        conditions. Because buyers typically
        ask for five years of historical financial
        reports, it is essential to track EBITDA
        now whether you aspire to sell your
        company quickly or anytime within the
        next five or so years.
           There are many ways COVID
        and the recession may be creating
        unusual changes within your com-
        pany's financial results. Below are
        some of the more common issues that
        you and your management team may
        need to address:

        Temporary Increases/Decreases to
        Revenue or Profits
           Due to COVID-19, some compa-
        nies may see a surge in demand for
        their products, leading to increased
        revenue and profits. Examples might
        include companies dealing with prod-
        ucts or services in the following areas:
        medical and health, cleaning and
        sanitary, home entertainment, trans-
        portation, delivery services and other
        industries. Conversely, other compa-
        nies may be experiencing a reduction
        in the demand for their products or
        services, leading to lost revenue and
        profits. Examples include markets
        such as hospitality and leisure,
        travel, luxury goods or services and
        others. In these situations, you and
        your team should monitor demand,
        revenue and profits to identify how
        much of the lost or increased volume
        relates to the current conditions and
        is not expected to continue after the
        virus and recession have passed.
        Business Facility Disruption
           Many companies are being forced
        to close facilities such as offices,
        manufacturing plants, distribution
        centers, etc. due to COVID-19.

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