M&A Lessons Learned: Takeaways from the Covid Years

Key Post-Pandemic M&A Takeaways

The disruptive years of the global pandemic have been an eye-opening experience for M&A advisors.

With tightened budgets, remote working arrangements, and unprecedented levels of disruption, resilience has become paramount for M&A investment bankers. 

As we emerge from these disruptions, it is important to reflect on the lessons learned from this challenging period and remember that SEA’s experienced team has seen these cycles before and knows how to navigate them with expert insight.

Conditions buoyed by historically low interest rates and a high availability of cheap, debt capital created unique opportunities for active M&A markets during COVID and just as the fog seemed to be lifting, the Silicon Valley Bank failure caused more consternation.

Despite the lingering effects of COVID-year dealmaking and the recent bank failures, the lower middle-market remains very active with prospective buyers offering strong multiples to well-run companies with strong cultures, savvy management teams, and plans for growth. 

Yet, it’s important to note that the M&A landscape has also shifted, reflecting a new normal. Here are four key areas that businesses should keep in mind for M&A post-COVID:

Increased Scrutiny on Due Diligence

Valuations will be more closely scrutinized. The pandemic has created volatility in markets, and this means that valuations will be more closely scrutinized now than ever before. Companies will be required to provide more detailed financials and forecasts, and buyers will be more cautious before going through with deals.

Companies may need to provide more detailed financial information and forecasts, which can be time-consuming and resource-intensive. Ultimately, it is important for companies to strike a balance between conducting thorough due diligence and ensuring that the M&A process remains efficient and streamlined to maximize the chances of success.

The  pandemic has made it clear that valuations and pricing need to reflect uncertainty. With market volatility and unpredictable conditions, it’s important to take into account potential risks and uncertainties when determining the value of a company and negotiating deal terms. For companies not quite ready to hit the market, it’s important to remember that you have options, and that partnering with trusted M&A advisory will help achieve your financial goals while avoiding costly mistakes. 

Distressed Assets 

Distressed M&A opportunities will arise. Not everyone has weathered the storm equally, and there will be distressed M&A opportunities available at discount prices. Strategic and financial buyers who have access to capital and are in a position to make acquisitions are eager to snap up companies that are struggling.

Growing Markets 

M&A activity will continue to increase. While some deals may be delayed due to uncertainty or governmental restrictions, many companies are looking to M&A to help position themselves for growth in the post-pandemic world. Here are some of the top growing M&A markets post-COVID:

• • • Technology

The technology industry has emerged as a key driver of growth and innovation, and it is expected to be a target for M&A activity post-COVID. As companies adapt to new ways of working and digital disruption, they will need to invest in technology to drive growth.

• • • Healthcare

The healthcare industry has been at the forefront of the fight against COVID-19, and it is likely to see increased M&A activity in the post-COVID era. Companies may look to expand their offerings, invest in research and development, or acquire innovative start-ups to drive growth in this industry.

• • • Energy

The energy sector has been hit hard by the pandemic, but it is expected to rebound and see increased M&A activity in the post-COVID era. As the world shifts towards renewable energy, companies will need to make strategic acquisitions to stay competitive.

• • • Consumer Goods

With changing consumer behavior and preferences, companies in the consumer goods sector are likely to engage in M&A activity to expand their offerings and diversify their product lines.

• • • Financial Services

The financial services industry is expected to see increased M&A activity as companies look to consolidate their operations and streamline their offerings. This could lead to more partnerships and strategic acquisitions in the industry.

These industries are poised for growth post-COVID, and M&A activity is expected to play a key role in driving that growth. Companies looking to expand and drive strategic growth should keep these markets in mind.

Entrepreneurs Earn More With Investment Bankers

We specialize in helping entrepreneurs achieve their financial goals and well into our 17th year, our success has no signs of slowing down.

When entrepreneurs work with SEA, they are able to unlock significant value through M&A. Whether you find yourself on the buy side or the sell side of a transaction, understanding the benefits of M&A helps to define priorities and maximize value.

At SEA, we listen to you to understand your transition goals and tailor our process to execute a clearly defined outcome. Call us anytime (215) 489-8881 or schedule a conversation here.