Webinar – achieving a scarcity premium in the post-Covid M&A market

Earlier today, our team joined owners of global Knowledge Economy firms to review the state of sector M&A, and explore the possibility of achieving a premium in the market as Covid-19 wanes.

Take-aways below.

Here’s the recording:

Presenters: Head of North American M&A, Jeff Becker, was joined by two of our London-based MDs, Jerome Glynn-Smith and Paul Dondos.

Key take-aways:

  • A few weeks ago, we made the at-the-time contrarian assertion that despite paralysis, volatility, the unfortunate human impact of C-19, and the general unknown, it might be a good time to think about realizing equity value
  • Day by day, that perspective has seemed less outrageous – we see that the immediate health emergency has passed, tailwinds are stronger, deals are progressing, and buyers are strongly engaged with the deals that are emerging

  • The pandemic has accelerated opportunities for firms providing digital transformation, consulting and technology partner services globally – especially for firms exposed to Financial Services, Government, and Healthcare/Pharma sectors
  • Risk averseness of buyers and sellers in March and April 2020 has created a bottleneck in the market that is currently increasingly being relieved. This will create an influx of transaction opportunities and a revival of deal volumes in Q4’2020
  • We are not seeing valuations impacted, as private transactions will follow the recovery of the public markets and in particular high-quality assets will be in strong demand
  • We have seen strong activity at Equiteq across the Covid period with deals closing at the beginning of the crisis. We have close to 20 ongoing projects at different stages from marketing to definitive documentation negotiations – projects are progressing thanks to a combination of asset resilience, acquirer intent, and creative deal-making
  • Our own pipelines for near-term decisions/kick-offs of sellside mandates have more than doubled since mid-May, with PE firms encouraging us to bring our better clients to market ASAP. Meantime, our buyside activity/engagements are at their highest level of all time
  • We are still not far removed from one of the best deal markets in recent memory, with momentum increasing

  • Owners of firms considering entering M&A should assess whether they are well-positioned to execute a successful transaction in the near-to-mid term, to take advantage of the current window and the continued shortfall of high-quality assets (ahead of a potential wave of supply from owners who deferred a decision)