The COVID-19 pandemic changed the way we do business —probably for good. 2020 caused some businesses to thrive, while others were unable to survive.
In early January, we sat down with three mergers and acquisitions experts to talk about what we can expect from buying and selling in 2021.
Moderated by Randy Gerber, our panel included:
- Steve Barsotti – Director, Kegler, Brown, Hill + Ritter
- Andy Hays – President and Co-Founder, Copper Run
- Thomas Pampush – Partner, Ice Miller
If you missed the webinar, you can catch it on our YouTube channel, or read our recap below!
3 Facts You Need to Know About M+A in 2021
- The market is hot.
The pandemic impacted the value of some businesses in 2020 due to buyers being wary of risk. However, early 2021 finds the market with substantial free capital and many people looking to invest.
There has also been an increase in SPAC offerings as people want to invest their money faster and more affordably. Our experts advised looking deeper into potential SPAC investments to ensure their legitimacy.
- Businesses are looking to maximize value in unique ways.
Buyers are paying attention. Companies that are investing their growth capital in streamlining their operations and bolstering their technological capacities saw returns on these investments during the pandemic.
Trimming the fat of your organization and bringing your operations into the 21st Century will not only help your processes in the short term, but will make your company more attractive to buyers if you decide to sell. 2020 saw businesses unwilling to invest in their operations take a hit. Expect to see this continue into 2021.
- Remote innovations in the M+A process may lead to permanent changes.
Due to shelter-in-place and social distancing orders mandated by the pandemic, the standard due diligence procedures of a sale were significantly altered. 2020 saw less “boots on the ground” before sales in the form of management presentations, dinners or site visits. Instead, 2020 sales showed a reliance on warranty insurance and scheduled earnouts for buyers, something that will continue into 2021.
Advice for buyers and sellers in 2021
Even with some knowledge of the market conditions, buying and selling during this time can feel like a shot-in-the-dark. Our experts had a few words of wisdom for anyone considering it.
- Take a deep breath.
Though many processes feel pressured during the pandemic, it’s important to take your time and stay grounded during your negotiations.
- Optimize your business.
If you’re thinking of selling this year, be opportunistic. Maximize the value of your business by having a good No. 2 in place, diversifying assets, and considering strategic partnerships or acquisitions to fill in gaps.
- Never settle for the first deal.
This one may seem obvious, but a hot market does not mean that you should buy or sell immediately. Do your research and establish your values and non-negotiables before moving to market.
- Sit down with an advisor.
Tax, legal, and financial advisors can help you in different ways to ensure you are getting the best deal, as a buyer or a seller… and the conversations don’t always cost money. Most importantly, our panel urged interested parties not to wait until the last minute to talk to an expert, as it may be too late for them to assist.
Many things have changed because of the pandemic, and it’s important to stay up-to-date and informed.