Denver, CO., (March 30, 2020) – All of us at The Forbes M+A Group are hoping you, your businesses, and families are maintaining your health and well-being during these trying times.
Over the past few weeks, The Forbes M+A Group has been closely monitoring the situation and wanted to pass along some trends we have been witnessing in M&A and the capital markets. As the environment continues to shift within the middle market, it is our goal to keep our clients and colleagues informed. It is important we find some level ground amongst the chaos.
With a variety of deals currently in market, we have been in the trenches for our clients discovering how best to navigate this difficult environment. We have been in constant communication with lenders, investors, private equity groups, and other strategic buyers to understand how they have been affected and get a sense of their expectations in real time.
The Mind of the Buyer
We understand there is some anxiety for sellers, and possible pull back from buyers in the early stages of transactions. Buyers, especially strategic ones, will be focusing on getting their own businesses in check before considering investing in outside companies. This will most likely slow down sell-side or capital raising processes, but not necessarily drive it to a dead stop. In some cases, sellers’ businesses may perform better in this market, which would create a very strong proposition for any buyer.
Future of Investments
Simultaneously, there are many driven investors who believe that in the long run, if the US responds to this situation in a similar way that China has, this crisis could be resolved in a few months. Those investors will continue to look for good opportunities and good companies. There is still a significant amount of committed capital held by investors and buyers with long-term investment theses. We are hearing from these groups on a regular basis with the message that they would still like to put money to work.
Banks and Lending
In the capital markets, some of the more traditional banks have been slowing down processes while they evaluate the market and manage new internal processes related to employees working remotely. We continue to speak with our network of non-bank direct lenders and are hearing that they are still active and ready to lend. It is likely that the threshold for lending has increased some but initial signs point to continued activity.
Overall, we believe we can expect a slowdown of processes over these next several weeks while the wounds are still fresh and the investing community continues to assess the market situation. But we believe forward-looking, smart, decisions on deals will continue given the amount of capital waiting to be deployed.
Please do not hesitate to contact our Special Situations team, as you and your constituents continue to navigate through unforeseen change. We are able to respond quickly, offer unbiased advice, and develop custom solutions designed to preserve flexibility and maximize value in the face of underperformance, distress, and/or insolvency. For a guide of key steps to consider when evaluating transaction solutions please click here.
Whatever the outcome, we hope to use our resources to support each other and help each other to overcome this.
The Forbes Team