Dealmaking, like many other business activities, paused when the pandemic hit the U.S. But since then, M&A has started to come back, in part because of pent-up demand, haste to do a deal before end of the year out of concern that a new president could mean changes to the tax regime, and because some owners aren't interested in building back their business after experiencing another economic crisis.

"I think that a lot of folks, more so those in generational-oriented businesses that have gone through the dot-com cycle and then the 2008-2010 mortgage crisis, now are seeing this and saying, 'Hey, you know what? I've been able to make some money and I think I don't want to have to experience this ever again, so I'm just going to sell and be done," says Brett Motherwell, managing partner at Kassel Equity Group.

While there are deals out there to make, Motherwell cautions that buyers should pay close attention to the way those deals are structured. He says there have been some changes from pricing to more structure being put into deals in the form of earn outs, carried equity or additional seller financing. Another consideration he expects to continue in the near-term is if a company took PPP money, how does that affect its existing bank covenants? If one were tripped, that could cause problems for both buyer and seller later.

Now, when exploring the purchase of a company, there's a tendency to be more thorough, to look at its 13-week cash flow rather than or perhaps in addition to its monthly or quarterly cash flow. Also, he says it’s helpful to look at billings and collections, and the state of potential jobs, looking for work that might have been put on hold by customers.

"So, really taking a very micro look at what happened throughout this 100-some-odd day look back, and then what does it look like going forward and what indicators seem to be standard and steady, and what indicators are fluctuating," Motherwell says. "Looking through all of that, you should be able to develop some sort of idea of where things are going to go.”

Motherwell spoke with the Smart Business Dealmakers Podcast about dealmaking during the pandemic and the importance of careful deal structures to mitigate M&A risks.

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