COVID-19 pandemic and the Black Swan Theory

Valērija Lieģe, Partner of Oaklins' team in Latvia, has given an interview to Forbes about the impact that we have seen caused by COVID-19 in the past two weeks. The pandemic has been compared to the Black Swan Theory of Nassim Nicholas Taleb, a metaphor describing an event that is not only highly improbable but also has a major impact. Who could have predicted that within just a couple of months COVID-19 would transfer from a small village in China to the whole world?

If we compare the crisis caused by the virus to the financial crash of 2008, it really is different – COVID-19 is a real phenomenon that cannot be explained. The only common characteristic of the two – this, too, shall pass – and our economy will recover. VALĒRIJA LIEĢE, PARTNER, OAKLINS LATVIA

We can already see the value of companies shrinking by 20-30% when compared to a month ago. This trend will continue in line with the rising uncertainty about the future. Despite the chaos caused by the pandemic, strategic investors are still on the lookout for potential targets, while focusing on companies offering innovative technological solutions.

It will take some time for companies to understand that the opportunity to sell their business for the highest possible price is behind them. Even those with excellent financial results and future potential will experience struggles closing deals. The privilege of looking at long-term development of the business in such uncertain times will not only ease the shock, but also allow for owners to improve their operations, says Valērija.

About Oaklins

Oaklins is the world’s most experienced mid-market M&A advisor, with over 850 professionals globally and dedicated industry teams in more than 45 countries. We have closed 1,700 transactions in the past five years.

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