What Post-COVID M&A Strategies Must Account For

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A business handshake, a business acquisition concept.

The International Monetary Fund confirmed that we’ve entered into a recession due to the evolving COVID-19 pandemic. Organizations are trying their best to implement business continuity plans in the short term. However, at this point, many simply don’t possess the bandwidth to afford a forward-thinking outlook.

That said, now, or at least soon, the circumstances may call for a bold move and consider circumventing the recession with a solid M&A strategy. In this piece, we’re going to cover what post-COVID M&A strategies must account for. Take a look.

Revisiting M&A Strategies Post-COVID

As we all continue to adjust to the new normal, specific tools/technologies are seeing a surge in adoption, such as cloud computing, collaboration and CX, IoT and edge, and network and security. They are playing a critical role in ensuring business resiliency and facilitating a remote and distributed workforce.

In such a context, a well-planned M&A strategy can provide businesses a competitive advantage because this segment-specific activity will be fueled by the following:

· Lower Valuations

Many startups tend to take a selling approach based on relationship building. Considering many of them tend to rely on a large chunk of their revenue coming from relatively few large, high-value markets or clients. As we start seeing the recession deepening, many startups that are highly dependent on a handful of markets and clients will begin struggling, resulting in lowered valuations, thereby increasing the possibility for acquisition. Moreover, the impact of the fiscal stimulus and the lowered cost of capital is also causing buy-side organizations to walk through and revise their M&A playbooks.

For example, Magic Leap, an innovative augmented-reality startup that raised $2 billion just a couple of years ago, is hard at work looking for acquirers amid COVID-related mass layoffs and the US-China trade war. BigTech organizations, service providers, and PE/VC firms are secure enough to leverage their balance sheets amid the downturn.

· The Opportunity to Fill Portfolio Gaps

Considering global trade growth is projected to slow down by as much as 20 percent, now may be the best time—given the price is right—for organizations to enhance their capabilities, expand their target market, and boost their top line.

If you’re considering selling your business or are looking to acquire one in South Carolina, Ohio, Pennsylvania, New Jersey, Florida, Massachusetts, Georgia, or elsewhere in the US, get in touch with us at Gulfstream Mergers & Acquisitions.

We are a leading M&A advisory firm and business brokers with decades of experience in the business of successfully helping clients settle mergers and acquisitions. Whether clients are looking to sell their businesses or are looking to buy a business for sale, we ensure we maximize deal value and create lasting and positive relationships. We also provide professional business valuation services.

Contact Gulfstream Mergers & Acquisitions for more information or call at 1-704-892-5151.

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