Page 7 - NBIZ October 2020

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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