Strategy and M&A in the times of COVID-19
Part 1: Buying
For all of the dislocation and disruption the virus has caused, we know we will come out of it some day…and using the down time at home to plan can position yourself and your company to be prepared to execute on your strategy.
Use the time normally spent with in-person meetings to ask your senior team to do some thinking. What is different today…and what trends do we see for the future. Work separately and allow home offices to provide the quiet time and introspection that cannot be done “at the office”.
Today, I’ll cover companies who were potential buyers prior to the pandemic and high-level considerations for their strategy. In a future post,
I’ll cover potential sellers.
For Buyers (or potential buyers):
If your strategy suggested expansion PRIOR to the epidemic, think about it today. Ask yourself the following questions:
1. Are the opportunities we were considering still good? Why?
2. How have our targets been impacted by this pandemic? Have the anticipated pricing /deal terms changed, and if so, why?
3. Is acquisition the best tool to get us to where we want to be? Or should we consider internal investment, partnerships or alliances to mitigate risk?
4. How do we tell the story to our investors / stakeholders that gives them confidence that we have a well-considered long-term plan, and that we have reviewed potential outcomes in the light of market changes?
Obviously, some industries will have more disruption that others, but the basic process remains the same. Your strategy should lead your M&A efforts just as it does every other part of the business.
If you are mid-deal, then by now you will have reviewed any documents and closing conditions with your attorneys. But beyond the legal ramifications, you want to revisit your motivations and objectives; it may be cheaper in the long run to exit the deal with penalties and/or renegotiate than continue with a flawed deal.
A final note. The industry “buzz” is that there are companies out there looking for “acquisitions-on-the-cheap”. This is no doubt true, but if an acquisition does not align with your strategy or you fail to do proper due diligence, you are more likely to catch a “falling knife” than get a great bargain.
At CorpDev Consulting, we can help you think about these questions. We have the experience to ask the right questions, both about your company and your acquisition target. Give us a call if we can help.