Weekly Update: Assessing the Impact of COVID-19

Below are our weekly summary thoughts on the M&A market, the economic outlook, selected opportunities, and reasons to be optimistic.

We will update you every Friday as the global COVID-19 pandemic continues to unfold.

Reasons for Optimism as the Global Infection Curve Shows Signs of Flattening

  • 142 deals were closed in the U.S. & Canada over the past 7 days
  • Equity markets posted their best results since the outbreak began, with the S&P 500 posting its best week since 1974 and the DOW posting its 7th-best week in history
  • S. bond markets rallied this week as the Federal Reserve announced it would intervene, dramatically lowering credit risk as high-yield and corporate bond spreads begin to normalize
  • Financial acquirers are sitting on $1.4 trillion of dry powder, the largest pool of private capital raised in history
  • Opportunities for disruption abound in areas of travel, lodging, entertainment, technology, healthcare, cybersecurity, and education
  • Promising economic recovery data from several former hotspots
    • Economic activity in China experiencing a “U” shaped recovery, with Manufacturing PMI rebounding from 35.7 to 52.0, and Nonmanufacturing PMI rebounding from 29.6 to 52.3 in February and March, respectively
    • South Korea slowly returning to business after aggressively addressing pandemic; Industrial Production rose 11.4% YoY in February, and Manufacturing production rebounded by 12%

Good News We’ve Been Reading:

COVID-19 Related Fatalities Falling in Hotspots Around the Globe

  • Fatalities in New York have fallen for the first time
  • Italy reported its fewest in two week period
  • France reported its lowest number in five days
  • Spain’s totals have fallen for three consecutive days

Advancements in Testing

  • One serological test has been granted Emergency Use Authorization from FDA, with 70 other developers notifying agency they have a test ready for use
    • Serological tests detect body’s immune response to the infection caused by the virus and while not a cure, can detect susceptibility to the virus and indicate an ability to donate blood safely

Vaccine Development

  • More biotech companies begin clinical trials for coronavirus vaccine, including Mesoblast’s trial of 240 patients at 20+ facilities across the country
  • The Bill & Melinda Gates Foundation is committing billions to help fund factories for seven of most promising vaccine constructs from across the globe

Race to Participate

  • Hundreds of businesses around the world are working overtime to help battle COVID-19 by manufacturing and supplying gloves, masks, diagnostic tools, ventilators, testing kits, vaccine

We cannot predict the future but can learn from the past – the global economy has witnessed many black swan events that were followed by great economic expansions

We believe that we will see a surge of new ideas as we emerge from this global catastrophe. Entrepreneurs will propel society and the economy forward through the creation of innovative new solutions addressing many of the new challenges that have revealed themselves.

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.