At Nash Advisory our team is always talking with business owners about their financial and personal objectives and how we may be of assistance to them in achieving their goals.
In the era of COVID-19 we have found a commonly held misconception by business owners that M&A (mergers and acquisitions) activity has ground to a halt and deals have gone into hibernation. This is not the case. Nash Advisory currently have multiple clients under offer, with various bidders currently in due diligence. Our transactions are in the following sectors: waste management, SaaS, packaging materials, agriculture, and chemical treatment.
In terms of COVID-19 M&A impacts, businesses will typically fall into one of the three below categories:
1. No impact or positive impact – Defensive sectors such as waste, health and essential services are still showing a strong level of investor interest. The underlying businesses have not had any negative impacts from COVID-19 and valuation levels are consistent with pre COVID-19 metrics, or even premium valuations.
There are also some sectors such as eCommerce and logistics that have been major beneficiaries of COVID-19 and valuations metrics have skyrocketed.
2. Wait and see – Sectors that have been significantly impacted by COVID-19 and are tipped to bounce back quickly, such as domestic tourism and some leisure activities are likely to see a spike of M&A activity towards the end of 2020. In general, investors are building a 'war chest’ of funds to makes sure they are ready to invest when these sectors return to some form of normality. Owners of businesses in these sectors should be preparing now for deals that will start in 6 to 9 months. We are assisting a handful of clients to prepare for a sale transaction in early 2021.
3. Subdued activity – Sectors such as hospitality and bricks and mortar retail were struggling prior to COVID-19 and this has been exacerbated by the pandemic. We do not believe that there will be any spike of M&A activity in these sectors in the short term and the sectors will take a longer time to recover.
Overall M&A is still very much alive and well, albeit adapting to the COVID-19 world. Business owners who were considering a divestment or capital raising in 2020 but have since shelved their plans due to COVID-19 should get in touch with Nash Advisory. We can provide you with an honest assessment as to whether we can meet your objectives in the current market.