What does M&A look like in COVID-19 times?

Authored by:

Maarten Wolleswinkel, Partner, Oaklins, Amsterdam

Eduard Bagdasarian, Managing Partner, Oaklins, Los Angeles

It seems like yesterday that we were celebrating the end of 2019, a successful year for Oaklins. Then COVID-19 happened and most mergers and acquisitions (M&A) processes came to a sudden halt. Once COVID-19's impact on business becomes more visible and plausible future scenarios shape up, M&A will be back, but initially at a slower pace. For now, buyers and sellers need to regain the ability to price and estimate risk in order to make correct M&A decisions.

As the spread of COVID-19 was accelerating around the world, governments responded with a record number of solid measures to support businesses and helping them to survive lockdown: Covid bridge loans for scale-ups, credit guarantees for banks, easily accessible salary support and extensions for the post lockdown period. Not all businesses will survive, but in general the support from governments has been unprecedented. Well-run companies will come out of this crisis stronger. This will be an excellent trigger for M&A.

How we are dealing with the current setting

Reference valuations for M&A deals (which are comparable listed companies) in many industries have rebounded to attractive levels. Of course, this is not true for hard-hit sectors like travel and entertainment. Depending on the circumstances, we are taking different paths to maximize value and probability of closing in each of our mandates. In some cases, we are extending the process timelines to allow for more buyer diligence, while putting other processes on temporary hold, accelerating market entry and shortening timelines in other fundraising and recapitalization mandates. Each situation requires experience-based, informed decisions.

  • Private equity funds – Sponsors have resumed their active search for complementary targets to strengthen their existing platforms, after pausing briefly to address the liquidity crisis in their own portfolio. However, most of them have still slowed down their pursuit of new platform investments. It will take 3–6 months before confidence is restored for bidding in highly-competitive auctions.
  • Alternative capital funds – Junior capital is still available in the middle-market from a large number of alternative capital funds seeking to invest in sound businesses that are facing temporary liquidity stress. In addition, for medium-sized firms, many new options are available for government-guaranteed loans.
  • Strategic acquirors – Most corporate buyers are focused on their own liquidity needs and reprioritizing their acquisition pipeline, but continue to pursue targets of strategic relevance.
  • Sectors seeing greater investor interest – Some companies are experiencing a surge in demand for their products and services, prompting them to accelerate their pursuit of a sale or recapitalization. Several of our clients who are benefiting from such a boost include those in the branded packaged food sector, tech-enabled services for hosting remote meetings, SAAS platform companies, e-commerce, smart logistics, testing, etc.

What entrepreneurs should do

We are advising every CEO operating in a crisis environment to consider the following:

  • Act with urgency
  • Focus on liquidity
  • Access alternative capital solutions in addition to pursuing government relief options
  • Be transparent and overcommunicate with all stakeholders
  • Team up with a financial partner to acquire weaker competitors
  • Consolidate and merge to gain scale, efficiency and market share
  • Do not hesitate to engage in a sale if your business is back on track. Valuations are surprisingly high after the stock market rebounded and almost €3 trillion of private equity is still hungry for investment.

Crises offer opportunities for growth

We believe that casualties notwithstanding, this crisis will offer some unique opportunities for growth to those entrepreneurs who will be proactive and bold. Every disaster in history, whether caused by man or nature, inflicted pain and loss, often followed by innovation and growth. COVID-19 will be no different and M&A will regain its place.


There is no “one-size-fits-all” answer as each situation is different and requires an understanding of the forces and opportunities in each industry sector. Therefore, please take the time to read the insights of our industry bankers under the Insights section or contact our office closest to you.

Maarten wolleswinkel
Maarten Wolleswinkel Amsterdam, Netherlands
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Eduard bagdasarian
Eduard Bagdasarian Los Angeles, United States
Managing Partner
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