Be prepared for a rise in deals activity

The impact of Covid-19 is the driving factor in changing the ways deals will be shaped in the post-lockdown world. The future remains uncertain, but we expect key themes to emerge.

As lockdown restrictions begin to ease, M&A activity is expected to rise. The buy-side will become more assertive - for businesses that have managed to maintain a strong balance sheet and cash flow position - and will emerge strongly to take advantage of opportunistic and strategic acquisitions.

The sell-side will struggle to adapt, we can expect buyers to scrutinise sellers to sell at lower valuations as seen in previous recessions. We can expect to see an up-turn in distressed and/or accelerated M&A activity.

Following the protection of portfolio companies, Private Equity houses (PE) remain highly liquid and have money to invest. Many PE firms are remaining resilient and actively seeking new opportunities.

It is likely that PE funded deals will continue to look for new platforms as well as an upward rise in bolt on acquisitions for their portfolio companies.

The digital and technology, healthcare, and home improvements industries have been least impacted by Covid-19 and will continue to thrive post-lockdown as appose to the hard-hit sectors, such as the hospitality, leisure and retail sectors, where the uncertainty of employment is high.

Somewhat surprisingly, strategically placed manufacturers continue to buck national trends and maintain good turnover levels.

Tips

• Prepare - assess business continuity plans, review supply chain disruptions, and ensure financial stability of your business
• Be creative - consider alternative ways to carry out business. Explore new sectors and think of creative ways to overcome obstacles, such as communication to maximise exposure and business
• Consider government assistance - the UK government offers a wide range of programmes to aid businesses and employees impacted by Covid-19

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