M&A impacts discussed during recent BVR town hall

BVWireIssue #211-3
April 15, 2020

valuation method
mergers and acquisitions (M&A), coronavirus, COVID-19

There were several questions about M&A activity amid the coronavirus crisis during BVR’s recent town hall webinar. Several audience members were business brokers, who commented that deals were still getting done to some degree. Here’s what they report:

“Our firm handles both Main Street and lower middle market deals—80% of deals that are ‘essential’ businesses are still moving forward. Strategic buyers remain fairly confident, but PEGs are less confident. Financial buyers (Main Street) are mixed. Some are canceling and others are delaying closing dates until stay-at-home orders are lifted.”

“We have only had one buyer back out because of COVID-19. We have several other deals moving forward. One buyer is a PE and sees this as an opportunity. Also, the big SBA banks, such as Huntington, are automating as much of the PPP [Paycheck Protection Program] processing so they can work on transactions. The SBA 6-month payment of principal and interest on new deals is a major incentive to get deals done by Sept. 27, 2020.”

“We also work as a business broker for financial advisors and while M&A is slightly on hold, we are still seeing deals and financing happening.”

“Banks are not canceling financing already approved. Buyers are the ones going on hold. However, banks are busy hence not looking at new deals.”

As to the extent to which there has been an adjustment to private-company valuations amid the market turmoil, the panel referred the audience to an article that points out the difficulty of discerning valuation trends from the data points in the deals being done.

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