M&A and Coronavirus

The rapidly evolving impacts of COVID-19 are being felt across society—in the healthcare system, employment, politics, and the economy. This is undoubtedly a time of uncertainty in our lives, and businesses.

Business owners are seeing the values of their business plummet. Smaller firms are naturally more susceptible in a downturn, particularly generalists without a differentiated strategy. 

Buyers, sellers, owners, advisors - everyone is paying attention right now. The eyes of the world are all watching, and now is the time to be a firm that leads from the front. 

Reflecting on our last significant downturn, and what successful firms did then to manage changing market dynamics, a few common themes emerge:

  • Private equity’s strong need for M&A professionals.
  • Retooling sourcing efforts to match this environment.
  • Focusing on ‘recession proof’ business categories.

COVID-19 Impact for M&A

The M&A services space will contract measurably in the near future, as the stock-market chaos will likely put the M&A market on hold. For deals in earlier stages, there’s definitely a lot of anxiety on the part of sellers and a bit more caution on the part of buyers — many are hitting the pause button to wait and see how the situation unfolds in a few months. 

But at the same time, buyers remain flush with capital. Not only are PE firms 'open for business' but many of them are accelerating efforts to close in-process deals, and even to scale future investing activities. 

“I am bullish on M&A activity in both the medium and long term once the market adjusts to the ‘new normal’. There is a tremendous amount of dry powder that needs to be deployed, record high valuations will likely decrease, we will continue to have a very favorable low interest rate environment and access to financing and certain underlying dynamics which have been driving M&A to this point will continue.” 

  • PAUL AVERSANO, Alvarez & Marsal Global Transaction Advisory Group

How to Adjust Your M&A Digital Strategy

While many M&A firms will press “pause” while they wait for the dust to settle and the market to stabilize, there is a unique opportunity for smart firms who want to strengthen their position. Industry and geographically agnostic firms will most likely need to refocus and concentrate their outreach efforts. Retooling sourcing and marketing efforts to focus on more 'recession proof' businesses may create opportunity. In today's market, most groups are proactively competing for deal flow directly online. Our in-house team of experts can help with:

  • Website Development
  • Branding, Messaging, Positioning
  • Content Creation
  • Paid Advertising and SEO Strategies
  • Email Marketing Outreach
  • Competition Analysis

COVID-19 Impact for Business Brokers

Business brokers are also likely to feel the adverse effects of an unstable market. Business owners who were “holding out” and waiting for the market to peak likely missed their window. Sellers will want to use ‘19 valuations and buyers will be much more cautious. Still, interest rates are at historic lows and reduced competition means that good businesses will still be bought and sold in today’s market. 

Some business sellers believe that the current market conditions will scare away buyers. As weakened financial buyers sit on the sidelines, stronger prospective buyers of businesses recognize the reduced background noise in the marketplace, the diminishing competition for good businesses, and the opportunity for lower pricing multiples. 

“Understanding the dynamics and changing motivations of buyers and sellers, and the available financing avenues can help consummate business brokers take advantage of weaker competitors, develop new and varied sources of business, and create the opportunities for success to survive and perhaps even thrive in their practice.” Yossi Haimberg, Catalyst Business Brokers

How to Adjust Digital Strategies for Business Brokers

Smart brokers will know how to navigate today’s situation and we’d like to offer a few insights on how to modify your outreach strategy to maximize your inbound lead flow. A comprehensive digital strategy will allow you to target industries that perform historically well in down markets while ensuring that your pipeline is flush with actionable leads. Target industries include:

  • MSP
  • E-commerce
  • Senior Care 
  • Insurance 
  • Repair 

About Merger Labs

Merger Labs is the only domestic digital marketing team that exclusively serves the M&A, Private Equity and Business Broker industry. We understand that the deal space is like no other and have developed service options that we feel directly reflect the needs of firms like yours. 

Our founding team is comprised of bankers, private equity professionals, and M&A service providers who have worked within the deal space for more than a decade. Our entire service model is built around the idea that we intimately understand the needs of the deal maker. We can provide a value focused, hands-on approach to your digital marketing need all while literally and figuratively speaking the language of a deal maker.

We plan to be working with M&A and PE professionals through this downturn and the next - if we can be of any help to any of you, please do not hesitate to reach out today by emailing garrett@mergerlabs.com or calling (844) 815-4500. 

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