One of the heartening things about crises is the way so many people pull together. Most people are still optimistic that the full lockdowns will be short-lived and that the economy will be able to rebound fairly quickly. As past recessions and depressions have shown, money changing hands through commerce is a critical element to recovery. Restaurants and other retailers and service providers are being creative about continuing to generate cash flow. My colleagues in banking, construction and numerous other industries are working harder than ever. Many people and businesses are willing to continue to spend.

Need to keep the money flowing!

One of the early concerns that I encountered among my clients and conversations with others in the industry was that tenants would simply stop paying rent, causing many landlords to default on mortgages, an on up the system.

Pegasus Investment’s Landlord Survey yields encouraging results

Pegasus Investments just published the results of a Landlord Survey on the state of the markets. The 651 landlords who took the survey provided a broad mix, with ~50% having 25 tenants or less in their portfolio, and 25% having more than 100 tenants. While the company makes it clear that the information is mostly anecdotal and unfiltered, it offers some bright spots:

  • Rent collections through April 10th were a lot higher than many had feared (64%)
  • Mom & Pop tenants were met by landlords with far more relief than national tenants were, although a surprising number of landlords did provide national tenants with relief
  • Although only 20% of landlords reported sending out notices of default, that needs to be taken in the context that only 35% of rents weren’t current. 

I think the raw data (CLICK HERE FOR THE CV19 LANDLORD SURVEY RESULTS) will be interesting to just about any landlord. I see cooperation rather than defensive actions being the majority response. It’s a good feeling.

Wall Street Journal, survey of renters . . .

I ran across another survey of April rent results in a seminar by Ted C. Jones, Chief Economist for Stewart Title that seemed to support the above data. A survey reported in the Wall Street Journal of 1,000+ small business owners with 50 or fewer employees showed:

30% made no rent payment

20% made partial rent payment

That is, 70% of those surveyed paid at least some of their April rent.

In addition, 25% said that their landlord or bank had offered a reduction or referral.

May Rent Collections will be telling

May rent collections may tell a very different story. Rent payments typically come from the previous month’s revenues, and April has been challenging for a number of businesses. How and when businesses will begin reopening, and the depth of business cash reserves that owners are willing to spend on rent will have a lot to do with how these numbers look in future months.

Most economics and industry experts in commercial real estate, business brokerage and other fields with their fingers on the economic pulse believe that recovery will be V-shaped, rather than U shaped, with the economy rebounding by Q4. I say hope for the best, plan for the worst.

  • Monitor your business – know and record the impacts of the shutdown.
  • Keep track of cash flow – it can be a challenge whether your business is being hurt or helped by the shutdown
  • Stay in touch with clients and customers
  • Get creative
  • Take the opportunity to plan for recovery now so you will be ready when it happens

As non-essential businesses are closing down across the country, customers are in short supply for a lot of businesses. This means that the businesses no longer have money to pay their suppliers, landlords, employees, etc. Yesterday I wrote about some excellent information I received regarding how to preserve your business and your assets when the customers are no longer there.

People are being creative. In my community, people are organizing to buy takeout from local restaurants and to buy from businesses that are still operating. By keeping some money flowing, there is more to pass up the chain. But as a creditor, whether to a consumer or a business, you can expect that that flow may become little more than a trickle.

The Dominos Toppling Effect

But even with community support, many businesses are going to suffer financial crises. I am a landlord, among other things. Over the weekend one of my tenants contacted me because his company is shutting down. Most landlords—as well as vendors and service provider with standing contracts—are going to encounter this situation as the shutdowns and quarantines continue. In fact, it will probably extend longer as businesses and individuals begin the process of recovery. It is nice to think that someone who can afford to lease a property to someone or sell goods and services on credit can survive without getting paid, but, if you are one of those landlords or creditors, you know that for most of us, this is not the case. When landlords and vendors don’t get paid, the money isn’t there to meet their obligations. And so on.

Good Banking Relationships Are Assets You Can Use

Cash flow is going to be critical. Although you are a creditor, you have your own obligations. A banker colleague shared today that your banking relationships are going to be a major asset. He warns that this is not the time to shop for new relationships, but rather to work the relationships you have. Bankers, like the rest of the business community, recognize the value of retaining good customers and not unnecessarily burning bridges. Your banker has resources that can help you weather this storm. Explore options such as

  1. postponing mortgage payments and adding them back at the end of the loan period,
  2. requesting interest reduction and/or higher limits in your lines of credit, and
  3. discovering how to apply for the SBA Disaster Relief programs now available.

Pass On Relief

A good tenant (or customer) in hand is much less expensive to maintain than finding a new tenant (or customer). And this current situation is nobody’s fault. An outstanding piece of advice that was shared with me was the beneficial effect of passing relief on. If we can get a concession from a lender or creditor, offer at least part of that windfall to those who owe us. Hoarding typically exacerbates shortages, Sharing reduces the burden for all. If we can be kind, listen to each other, and collaborate to find solutions, we will all get through this more easily.

Often business owners wait until they are really ready to sell the business before beginning the sales process. This can lead to disappointment and frustration on a number of levels. Here are some considerations for making sure that you optimize you changes of a successful business sale.

Make sure to include a realistic timeline when deciding when to put your business on the market

While It is possible to sell a business in 4-6 months, it is much more likely that going from initial business opportunity offering to successful conclusion of the sale will take 12 months or longer.

This may sound like a long time, but both industry statistics and personal experience indicate this is realistic. Even once a potential buyer decides to send a letter of intent to purchase, they aren’t likely to sign a contract right away. Typically you can expect the buyer and his consultants (attorney, financial advisor, etc.) to ask for documentation and do their own business, financial and legal calculations to confirm that what they expect is what they are getting—and that can take 30, 60, 90 days or more depending on the complexity of the business.

Since business brokers don’t get paid unless we make a sale (with the exception of when the seller changes his/her mind during the term of the contract), it is in your broker’s best interests to not let our clients’ business properties just sit on the shelf; we actively pursue qualified prospects and act to close deals as quickly as possible.

Have three years of good financials and a solid, repeatable business model in place before beginning the sale process

For a business to be saleable, the owner needs to demonstrate that there is enough cash flow from the business to allow the new buyer to pay down the cost of financing the purchase while at the same time paying him/herself a living wage. There is the rare buyer who purchases based on emotion and doesn’t care about typical due diligence, but most buyers want a minimum of a three-year track record to demonstrate earnings capability. At least three years before your intended sale date, you want to start looking at free cash flow (what’s left after all business expenses including your salary are paid), at demonstrating that you are dispensable—that the business can run without your day-to-day presence, and that you can demonstrate steady growth—and growth potential. You may be able to sell a business without these pieces in place, but it will be at a deep discount.

Plan to get out close to your peak

Some business owners wait too long before putting their business on the market. They have been seriously ill and the business has been sliding for years, they want to eke out a few more years of profitability if the business is growing rapidly and they decide to reap the rewards before selling, or perhaps they simply wake up one morning really tired and want out right away. I have had clients who represented all three of these categories and the results were heartbreaking.

Trying to run a business when your health isn’t up to it typically means that the value will decline rapidly, or the business will become unsaleable. If you encounter illness or other family catastrophes that will take you eye off the business ball for an extended amount of time, get management help early to avoid making a bad situation worse.

One team of successful businessmen were ready to start the sales process when a huge contract was presented to them. They decided to hold on for another year to reap the extra profits. Unfortunately, they missed a couple of points in the fine print and the deal went south. And so did their profits. They had to work for several more years to recoup the losses from the bad deal and grow the company back to where it had been when the initially decided to sell.

One client just got tired. Once the business was on the market, despite being briefed on the average time required to get a business deal closed, the owners were ready to retire. Instead of working to keep the business on track, they started taking shortcuts—reducing marketing expenses, curtailing the number of hours they spent on the job. The resulting drop in profits cut into the final sale price dramatically—and it didn’t have to happen. I’m always happy to offer a 30-minute consultation with a businessperson at any stage of their business to help them develop a plan to successfully exit their business on their own terms. Email me at or call me at 505-720-6593 to set up an appointment.

In most cases, a business broker will be a transaction broker – working with both buyer and seller to effect a successful transition of the business – although typically fiduciary responsibility is to the seller.


  1. Confidentiality
  2. Complexity
  3. Timeframe
  4. Risk
  5. Needs to be a win/win


  1. Typically thinks business worth more than it is or wants buyer to cover previous losses
  2. Less sensitive to buyer’s concerns and needs
  3. Often has difficulty letting go
  4. Often has to carry back some of the paper—fear that the buyer will default and leave them with nothing
  5. Overprotective advisors
  6. Tax considerations


  1. Difficult to really understand value of the business
  2. Taking a gamble—is the business really as represented, will they be able to meet loan payments
  3. Wants to pay the least amount possible; put down least amount, pay for future performance
  4. Overprotective advisors
  5. Tax considerations

Getting to “yes” is difficult! And, the letter of intent is only the beginning!


  1. Seller holds on too long (sell at the top!)
  2. Seller wants to salvage something from losses rather than invest to build something that will sell
  3. Sell has unrealistic timeline or wants to hedge their bet
  4. Seller demands too high a price and buyer fails before seller gets his full payment
  1. Buyer is financially unqualified
  2. Buyer demands too low a price and seller does not cooperate during transition
  3. Buyer doesn’t know what she wants and kicks tires
  4. Buyer is undercapitalized for running business
  5. Buyer overestimates ability to run the business

Best solution: educated constituency. Seller needs a good track record. Buyer needs realistic assessment of capabilities. Both need to like and respect each other.

Today, New Mexico Governor, Michelle Lujan-Gresham, issued “stay at home instructions.” It’s short of martial law, but she does make the point that she has the right to “instruct” New Mexico residents to do this unless they are involved in essential activities.

While this unprecedented shutdown of the economy may be necessary to ensure essential services—the governor painted a picture of the possibility of not enough healthy people to perform essential services if the virus is not controlled—it is creating havoc for small business owners and their employees, families, suppliers and customers.

Seth Gardenswartz and Candice Lee Owens, partners at Blackgarden Law, provided insightful, practical and valuable information to New Mexico Restaurant Association members at a webinar today on small business disaster response tools. They discussed “Force Majeure” clauses, Business Interruption Insurance and Negotiation.

We are all feeling our way through this crisis, but the information contained in this blog may help you make and execute plans to protect your business and yourselves:

Note: there were two areas mentioned in the discussion, that were not highlighted in the blog. I think they are both important to consider.

The first has to do with negotiation with landlords, vendors and service providers. If I understood correctly (and I am not a lawyer and cannot give legal advice), beginning a conversation by saying “I’m not going to pay you” may create an event of default, which could snowball into a lot of unpleasantness. If you need to negotiate less onerous payment conditions—short term or long term–than those spelled out in a contract, consult your legal counsel first and make a plan for negotiations, not ultimatums.

The second has to do with facing financial difficulties realistically. Particularly when you as the owner have made personal guarantees to back up the business, if you see things are getting really bad, stop the bleeding sooner rather than later with the help of your legal and accounting advisors. Protect your personal and business assets by getting relief while there are still assets to protect, not after you have burned through them.

Be well. Be prosperous. We New Mexicans are resilient and will get through this crisis. Now is the time to take deep breaths, relax, and be kind to each other as we navigate our business planning and recovery.

You are thinking about selling your business. You’ve worked hard and long and are proud of the results. Now you want to turn over the reins to someone else and reap the rewards for your efforts. You think about selling the business yourself, but upon further reflection, realize there are obstacles:

  • You may know how to sell your product or service, but how, exactly, do you sell your business?
  • You know how much you want for it, but how do you justify it to someone who doesn’t know it the way you do?
  • How do you find buyers while keeping your intent a secret? Your business can be hurt if employees, customers or vendors learn that it is on the market.
  • How do you find time to focus on selling the business when you still need to run it?
  • You can’t let the business slide while you are looking for a buyer—it will affect valuation.

Business brokers, like any professionals, specialize; they practice their skill regularly. They may not know your business as well as you do, but they know how to provide a broker estimate of value, prepare a Confidential Business Opportunity Report, market your company confidentially, screen potential buyers and broker win/win strategies for the transition of the business from the current owner to the buyer. You may want to look particularly for a broker that has received a Certified Business Broker designation, which assures you that the broker has undergone anintensive 100-hour certification program and passed a rigorous exam.

Business brokers also can be a source of referrals to other professionals you may want to employ to assist with the process – attorneys and CPAs that are skilled in business transactions, loan officers and private funding sources and others. The stakes are high when you decide to sell the business that you have spent your time, money and passion building. It makes sense to hire professionals who are skilled in the process to help you optimize the benefits of the transaction.  

The role of a business broker is very different from a real estate broker (see: Link to Business vs Real Estate broker paper). While both are skilled professionals in their fields, a business broker’s job is just beginning when a prospective buyer proffers a Letter of Intent and serious negotiations begin.

Business brokers typically work for a “success fee,” which is payable at the end of the negotiations when the business has changed hands. During the due diligence process, it is the buyer’s responsibility to confirm all representations made by the seller to the level of comfort that will allow the buyer to proceed. Since the seller’s reputation is tied into the representation that the business is viable and since most business sales include a provision whereby the seller finances some portion of the sale price, it is important that the seller and buyer like each other and have reasonably similar ideas about what makes the business successful. There are numerous intangibles involved in the successful transition of a business and the buyer and seller need to work together during the transition period (and perhaps longer) to ensure the success of the transaction. An experienced business broker facilitates the negotiations and helps ensure that both the buyer and the seller are comfortable with the end result.

Your business broker will allow you to continue to focus on what you do best – make your business the best it can be. You can expect a business broker to evaluate the business for sale, do market research and evaluate opportunities to enhance the market value.

Based on the above, a business broker will develop a defensible estimation of value, exploring multiple accepted valuation methods to assist in developing a final price – or range of prices. Because different buyers will value the business for a variety of different reasons, it is virtually impossible to have an absolute value. However, when it comes to negotiations, the negotiator who has the best command of logic when defining a sale price is likely to be the one whose influence is dominant in the final selection of the price.

The business broker will also seek out and vet qualified prospects. This means that they have both the interest and the financial capability to purchase the company. Prospects must execute a non-disclosure agreement before getting an confidential information about the company, including the name. As the seller, you don’t need to waste time sifting through unqualified prospects and imperiling the confidentiality of the offer. The business broker’s objective, whenever possible, is to bring multiple prospects to the table because this provides better negotiating strength for the seller, and the search is likely to be national in scope. The business broker acts as a “middle person” during negotiations with a prospective buyer. The broker is there to diffuse emotion and provide suggestions, based on past experience, for developing win/win situations that get past potential negotiating roadblocks. While the seller and buyer should both have their own teams of private advisors, it is important to realize that the safest avenue for the buyer’s consultants and advisors (especially CPAs and attorneys) is to turn down any deal. There is no business that does not come with a level of risk, and the buyer is likely to expect – or demand – a discount to account for the risk inherent in the transaction.