Last week, we responded to questions about the various provisions of the CARES Act, which were critical for businesses as they navigated the Paycheck Protection loan applications.
This week, for our second installment of our Friday Mailbag series, we had two more great questions from clients who are still trying to figure out how their businesses will be impacted by this unprecedented situation.
The first question we received was about the coronavirus pandemic’s effect on business value. George asked:
How will the ongoing situation with the coronavirus affect the value of my business?
If I had to think of one question that was on every business owner’s mind, it would be this one. Especially for those businesses that were considering an exit in near future, it’s scary to think that something out of your control could wreck the value of your business. Fortunately, a single extraordinary event (whether good or bad) won’t necessarily have a lasting effect on the value of your business.
Our second question comes from a client that’s currently in the process of selling her law firm. She wondered:
It seems as though a lot of potential buyers we've heard from expect to structure the sale of the firm as an earn out arrangement. Is this just a negotiating tactic or is there some reason behind it?
Obviously, our client’s name has to stay confidential in this instance to protect the integrity of the sale. But the question is an important one that has implications for any solo or small firm attorney who is contemplating the value of their law firm and exit strategy. Potential buyers also may want to rethink the earn out arrangement or at least ensure they fully understand the implications of that arrangement.
We hope you enjoyed this week’s Friday Mailbag. You can submit your own questions to be featured in future Friday Mailbag episodes!
If you have any follow up questions or need assistance with the issues we discussed here, please give us a call at (407)649-7777 or email us. We are here to help you and your business during these tough times.
