Regardless of the type of business you’re running, it’s safe to say that you’ve likely already been impacted by the ongoing COVID-19 pandemic that is making its way across the globe. With no complete end to the situation in sight, many have begun to try to settle into whatever this “new normal” actually is. They’re resuming their regular activities (at least as much as possible) and are once again attempting to continue to follow the path that they set for themselves and their organizations at the beginning of the year. This, of course, presents its own fair share of challenges. Once you get your doors opened back up again, you may start to think about other important events down the line: valuations and appraisals, risk assessments, and succession planning. Thanks in no small part due to COVID-19, many private enterprises and even family-owned businesses have been forced to dramatically rethink their points of view on these and other important wealth transition and succession planning topics. Not only that, but when you consider that roughly $68 trillion is set to be passed down from Baby Boomers to their beneficiaries over the next ten years – an unprecedented transfer of wealth – it’s clear that these are issues that must be assessed sooner rather than later. Business Valuations in a COVID World One of the more unfortunate impacts that COVID-19 has had in the last few months involves a decrease in small business values across the board. The fact that both actual and expected revenues and earnings have likely decreased for many organizations, coupled with an increase in interest-bearing debt and liquidity issues in the market at large, all have a lot to do with this issue. At the same time, it is entirely possible to mitigate risk to that end by keeping a few key things in mind. First and foremost, focus your attention on cash flows, the cost of capital, and growth as much as possible. One of the most critical considerations for a proper business valuation in these times involves figuring out what, exactly, a recovery from COVID-19 will look like for your organization. Obviously, certain industries have bounced back faster than others. Likewise, there are certain things that we just cannot know right now – like when a vaccine will be available and what effect that will have on the world. But you can focus on a few key areas – like whether you will experience a full recovery or only a partial recovery, and how long that impact will last – to make better determinations about projected cash flow and other growth-related factors. On the plus side, all of this represents a unique opportunity for many people to take advantage of low small business valuations to minimize things like estate and gift taxes. Lower business valuations allow business owners like yourself to transfer a greater portion of your business assets and reduce your taxable estate. So, from that perspective, you’ll be able to gift assets against your lifetime exemption that would have previously been considered a taxable event had COVID-19 not occurred at all. Mitigating Risk and Protecting Your Legacy In general, you need to remember what the major goals of wealth transition and succession planning actually are: you’re attempting to preserve as much of your wealth AND your business as possible. It’s about making a plan that you can follow over time, yes – but it’s also about being flexible enough to evolve that plan as conditions can (and likely will) change. Case in point: COVID-19’s impact on the supply chain. Even if your small business isn’t being directly impacted right now to the same degree as others, the same might not be true of your supply chain partners or even your largest customers. These could absolutely have a considerable impact on your own operations, and if your organization is particularly vulnerable to these types of issues, you need to start thinking about ways to mitigate them as soon as you can. Likewise, you may be one of the lucky few businesses that wasn’t actually negatively impacted by COVID-19 at all. Some industries are absolutely thriving right now – with manufacturers of personal safety gear and even a lot of food and beverage manufacturers being among them. If all of this describes your situation, it’s likely that you’ve seen a short-term increase in sales and, in all likelihood, profitability. How will this impact the future of your organization? Is this what the “new normal” looks like for you, or will you eventually return to pre-COVID levels in terms of sales and profitability? Do you have a way to determine this right now, or is time going to have to tell the story? These are all critical questions that you need to try to answer to make the best possible decisions in terms of succession planning. In the end, understand that wealth transition and succession planning were always complicated processes, and COVID-19 has not done anyone any favors. No matter what, you need to recognize that this is an inherently specific process: so much is impacted by your own unique circumstances and the facts surrounding your organization. Likewise, your end goals will play an important role in the decisions you make, along with how they may have changed in the last few months. However, if you’re able to keep these core best practices in mind and look at things through this new pandemic lens, you’ll be able to create the right plan for your objectives with as few of the potential downsides as possible.