Despite the M&A news of the past two years focusing largely on the pandemic's high deal volume, not every company that had been considering a sale felt they'd get top dollar, says Proformex Chairman Lou Schneeberger, so they waited. As conditions have improved, companies in this segment, which he's calling the COVID backlog, are reconsidering their options.

"The COVID backlog would be, you're not going to sell your company right now because you're directly impacted from COVID," Schneeberger says. "You were going to go to market, you were going to sell your company and you said, 'I'm going let this play out. I know we're going to get through it beautifully. I know our numbers are going to look really good, so let's just wait for one more year and prove to the market that we withstood COVID."

Companies that performed poorly during COVID, largely because of the nature of their business, are starting to warm up to the thought of selling. But to formally engaged in a process, their internal numbers have got to justify it. A focus for companies in this situation, he says, will be the next 12 months and making sure their numbers stabilize. They're betting that there won't be another COVID variant that would shut everything down again. And they've made the decision to let the owner stay with the company and keep it going and then assess the situation.

"Their financial results may still not be as good as they want them to be," he says. "The last 12 months still means a lot and if in your last 12 months, six of them are during COVID and they're terrible, that's still not good."

The forward model looks better when your past 12 months are solid, he says. Many companies aren't there yet.

"You get 100 percent value for what you have done," he says. "You don't get 100 percent value for what you're going to do."

For those who did pause because of the negative impact COVID had on their business and who are now preparing to make a serious push towards selling, Schneeberger says it's important for owners to be as clear as they can about what happened, the financial impact it had and what specifically they did about it?

"Can you show tangible situations, what you've done about it, that caused you to come out of this so that a buyer can see that this management team that they're going to go and invest in has its act together and I want to invest in them," he says. "There's nothing more telling about a company than what it does when things are tough."

Schneeberger spoke on the Smart Business Dealmakers Podcast about the COVID pause, where companies are today that were negatively affected by the pandemic, and how they move forward to a successful transaction. Click on the player to catch the full conversation.