Will this cloud have a silver lining?

As a society we’re currently facing many unknowns and trying to think of new ways to be productive and efficient with the many restrictions we have in front of us, like working from home, self-isolation and social distancing.

Surprisingly, my phone has been busier this week than it has been before this pandemic started.  I recently made a post regarding 3 personalities we will see during this time 1) Bunker Down 2) Invest and 3) Status Quo, and those also reflect the type of calls I am getting.

Some dealers are calling to see what is going on in the market, is there even still a market out there?  I can say from my own experience that the M&A market is actually gaining momentum.  The dealers that were on the fence have now come down and want to get started on their valuations because they now have the time to focus, gather the docs and get their house in order.  DSMA’s valuation process, which includes a business Normalization analysis, takes note of the current situation, but values businesses over a much longer period, so the COVID-19 impact on business values is negligible right now.

Others are calling to see what sort of opportunities have presented themselves and where, because they see more light at the end of this tunnel than darkness, especially with the reduced cost of borrowing.  Now is the time to invest and move those plans of expansion forward.

I would be remis not to admit that some deals that were in the works have been paused, but only a very few.  I see this as an opportunity to speed up. With limited distraction, we can now focus on what needs to be accomplished from a remote location and finalize a lot of those outstanding documents like Purchase Agreements, LOI’s and other sorts of Due Diligence items that don’t need gatherings or physical contact.

So, will there be a silver lining to the COVID-19 pandemic?  Business values should hold meaning sellers can have confidence in the market and banks are itching to lend, so borrowers can find the cash they need to complete their acquisitions.  I see a win, win situation for both sides of a transaction and that’s a true silver lining for the M&A sector.

To discuss this article or any aspect of the buy/sell process, please feel free to reach out to me at any time at kevin.leslie@dsma.com.


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