This August 2020 article considered how business owners could assess low offers during COVID-19 disruption. A seller needed to distinguish evidence of weaker trading from opportunistic pricing, compare payment terms and judge whether waiting was financially viable.
By Tony Vaughan · Published · Last reviewed
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Assessing offers in the 2020 pandemic
During the COVID-19 pandemic, some owners received offers reflecting disruption to trading and uncertainty about recovery. A low offer was not necessarily opportunistic: sellers needed to test the buyer’s assumptions against the business’s financial position and prospects.
The pandemic affected sectors differently. This article does not establish that the SME business sale market as a whole remained buoyant in August 2020. A strategic buyer might have considered longer-term opportunities, but could still have sought a lower price or protections against uncertainty.
Whether waiting was financially viable
Waiting for another offer was only an option if cash flow and the business’s financial position allowed it. Owners facing financial distress needed timely professional advice, including on directors’ duties and creditor interests, rather than relying on the prospect of a better buyer. Comparing credible offers meant assessing both the price and the risk attached to payment and completion.
Owners considering a sale during that period could seek independent advice on valuation assumptions, affordability of delay and buyer qualification. The practical lessons remain useful, but current decisions require up-to-date financial information and advice.
Common questions
Does this article describe the business sale market today?
No. It was published in August 2020 and retains its historical notice. Its discussion of COVID-19 disruption should not be treated as a current market assessment.
How could an owner assess a pandemic-related price reduction?
Ask the buyer to explain the assumptions behind the offer and compare them with trading records, cash flow and realistic forecasts. Temporary disruption and lasting damage could justify different assessments; neither should be assumed without evidence.
Was waiting for a better buyer always sensible during COVID-19?
No. Waiting depended on cash reserves, trading prospects and creditor obligations. Where solvency was uncertain, the owner needed prompt accounting, legal or insolvency advice rather than an assumption that trading would recover.
Would a strategic buyer necessarily ignore pandemic risk?
No. A strategic buyer could value long-term opportunities but still seek a lower price, deferred payments or other protections. The whole proposal needed assessment, not just the buyer’s description of itself.
General information from our archive, not personal advice.
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