Assessing the Impact of COVID-19 on the U.S. M&A Market

We hope this finds you in good health and positive spirits despite the considerable disruptions to life as we know it in recent days. We have been asked by business owners how M&A markets will be impacted by not only dramatic fluctuations in the market and but also other current events. As you know, this is a very dynamic situation, and we plan to disseminate relevant updates as appropriate. Our grandparents faced the Spanish Flu, World War I, the Great Depression, and World War II. This is a challenging season but we will rise to the occasion.

Throughout the coming weeks, we will be sharing updates to help you make informed decisions.

Here are some quick facts that frame our understanding of the current state of the market:

  1. Strategic deals continued to move forward without significant delay – 110+ deals closed in the U.S. & Canada within the past seven days.
  2. Private debt funds are sitting on $241.4 billion in dry powder globally as of Q2 2019 and are incentivized to continue investing through the upcoming days.
  3. Dry powder available from strategic, financial, and family offices is still enormous and at historically high numbers–trillions of dollars.
  4. Corporate earnings and capital markets will likely snap back following a clear indication that we are on the positive side of the infection curve.
  5. Many investors see this period as a historic buying opportunity akin to 2008-2009 and 1987.
  6. Well-capitalized banks will continue to inject liquidity, and companies with strong performance and an appetite for growth will continue to make acquisitions.
  7. New opportunities arise as companies seek to optimize capacity and efficiency, creating competitive tension between buyers and enhancing the attractiveness of a potential target.
  8. Most transactions that were about to launch are on a 60 day pause. Selected healthcare deals are forging ahead.
  9. The 3rd quarter is likely to see a substantial snap back in economic activity

ArkMalibu is happy to answer any questions you may have and to offer guidance during this challenging time. Until our next update, we send best wishes to you and yours for safety and health.