he crisis triggered by Convid-19, increased – especially from July 2020 – around 20% the number of partners of small and medium-sized companies (SMEs) with willingness to sell their companies. I observe, in frequent meetings, this desire, this determination and sometimes even anxiety.

The causes that led to these entrepreneurs’ willingness to anticipate or even put in the short-term agenda, the decision to sell the company, which can be either from the point of view financial, given the recession that affected 90% of companies, even the psychological side.

In the financial field, it is obvious that the recession, strongly felt by SMEs, brought about a drop in sales, loss of liquidity and solvency risk. This set of forceful strikes negatives have thrown the ability of many to reorganize the company’s finances and and the inescapable solution, in many cases, is the sale of their shares, which can be give by two channels.

The first is the partial sale, that is, accepting the entry of a partner or splitting the company and thus the consequent sale of the healthier and more attractive “slice”. the second channel it is the total sale, to interrupt, if it finds a buyer, the growing loss.

But the Coronavirus pandemic caused the psychological field, highlighting the self-motivation, and even fear for what the future holds, gained strong and growing relevance in the company’s desire to sell.

I often hear statements such as: “I was not very satisfied, now, with this threat to life, I want to sell” and “look at that, life is not worth anything, I want to enjoy the years I lack and I have no successors”, and still “my partner and I were already diverging and in conflict, now, with Covid, it’s time to define our directions as to who stays or leaves the company”.

Every year, in all business sectors, companies are created and sold. But what is the economic effect of the company’s advance decision to sell?

The answer is difficult to give with certainty. This is because there is no clarity even about the size of SMEs and their participation in the economy, given the diversity of information sources, such as IBGE, Sebrae, etc., and their respective classification criteria.

I estimate, informally, only based on the experience and the crossing of data from those institutions, which we have in Brazil around 200,000 active companies, which invoice annually in the range of R$10 million to R$80 million. Of these, 5% are regularly sold or even closed, in a given year, that is, around 10 thousand companies.

If Covid-19 increased the companies offered for sale by 20%, then we have an increase of 2,000 SMEs for sale, in addition to the annual midpoint. Considering that the average valuation of these companies is around BRL 50 million, we are talking about BRL 100 billion, which they changed ownership, “exclusively” as a result of the pandemic. This value is equivalent to almost 50% of the sum of operating profit in 2020 of all companies traded on B3.

The emotional impact, “relief” for interrupting company losses and “frustration” for not continuing with the company are not quantifiable and much less monetarily, but, they certainly were, and continue to be, giants.

Find Investors and Companies for Sale,
Autonomous M&A Agents and Advisors Fin and