by Loren Smith
As one would expect, our business is not different from most during this time of extreme disruption caused by the coronavirus. I continue to stay in close contact with a number of wire harness manufacturers, and each reports changes that we all hope are reversed before long.
As I write this, I am aware of companies asking their administrative employees to work from home … companies implementing contagious workplace disease practices, such as reconfiguring their facilities to allow for additional space between workers … and companies preparing contingency plans to be executed in the event of significant reductions in demand. And many companies are taking more than one of these steps.
Although the impact of the coronavirus varies from region to region and company to company, and no one knows the eventual impact on different segments of the economy, I can tell you one dynamic of our wire harness industry that will remain constant: Even in a time of unprecedented uncertainty, some owners will want to sell––and they will find buyers.
My years of helping craft deals have revealed that when an owner is intent on selling, delaying may not be possible, even in the face of something as seemingly obstructive as a national crisis or recession. Many harness owners, because of their age or health issues, need or want to retire before a temporary circumstance runs its course. So the critical question is whether there are any potential buyers when the climate for selling turns bleak. And the answer is yes, but they must be buyers who do not require bank financing to fund a deal.
Granted, a pandemic or recession is hardly the ideal time to sell a business, but it is not impossible. Prospective buyers can be interested in harness acquisitions for all sorts of reasons, and these reasons often remain in place regardless of the state of the economy. Therefore, if an owner needs to sell, and if her business is fundamentally sound, finding a match is entirely doable––especially with the benefit of experienced help in sourcing prospects. It’s possible to craft a deal that includes allowances for a circumstance that will turn around with time.
The word “unprecedented” is being used a lot these days, for good reason. Based on my current observation of the wire harness industry, I feel secure in saying that even in this uncertain period ownership of some wire harness companies will change hands.