COVID-19 Update: Staying Focused on Your M&A Plan

March 23, 2020|Ann Hanna, Corey Vanderpoel

For the past months, coronavirus, or COVID-19, has been dominating headlines across the world and progressively impacting the markets, economy and personal lives. The volatility of the markets and economy should have no bearing on your M&A objectives to sell, recapitalize or acquire, but rather might just impact the strategy and timing of such. Accordingly, we expect the strong M&A market to continue but for there to be a short-term "pause” in certain deals until the impacts of the virus and corresponding business impacts are understood.

Through it all, Taureau Group's commitment to our clients is unwavering. We’re always available, even when working remotely, and would welcome you to get in touch. With nearly 100 years of investment banking experience, we have the knowledge and familiarity to work with you through your specific situations and questions so that you're prepared when the market stabilizes. We've also updated our services to account for the specific impacts of COVID-19 and to match your objectives, whether you're looking to:

  • Acquire businesses – Now might be an opportune time to approach target businesses as there is a higher likelihood of having a conversation with a business owner that doesn't want to retrench from the impacts of COVID-19 or are still interested in selling with a smaller population of potential buyers. We’re noticing higher response rates on our acquisition searches in the past week because business owners want to talk about options…and we could uncover these growth options for you. 
  • Sell or recapitalize your business – It remained a seller's market entering 2020, and it’s still expected to be a strong M&A market when the COVID-19 situation stabilizes provided the abundance of capital and dry powder that remains with buyers. As such, to take advantage of these unique times, we're working with business owners on a longer-term basis to prepare their businesses for sale and analyze the impact of COVID-19 with no added cost of our services. If, through our analysis and preparation for market, it's determined the best direction is to "pause" before approaching the market, we'll simply continue to analyze the business, offer advice and guidance, and position the business for sale when the time is right. By pushing forward now with a sell-side process, it provides two primary benefits: 1) greater time for on-going analysis of the current situation and preparation of the business to effectively drive value; and 2) completion of all sale documents so that, when the time is right, an approach to the market can be done in an expedited manner.
  • Secure capital for short- or long-term objectives – Taureau Group has relationships with hundreds of lenders and investors focusing on commercial senior, junior, mezzanine and minority equity structures. We have multiple avenues to secure debt and equity partners for turnarounds, short-term capital, growth or operational support. Also, we can help provide up-to-date information and guidance on new programs that offer flexible capital for companies impacted by a loss of sales as a result of COVID-19, employee work restrictions, the closing of retail and commercial locations and supply chain delays, among others.
  • Understand valuation impacts to your business – We have modified our traditional calculation of value process to provide a valuation (and related market and buyer universe intelligence) based on historical financials before any COVID-19 impact and a second valuation based on your performance through (and after) this unique (unexpected) event. 

External Resources

In addition to the M&A-related services Taureau Group can provide, there are vast external resources to support businesses through this unprecedented time, including:

  • SBA Economic Injury Disaster Loan Program (EIDL) – SBA's Economic Injury Disaster Loans (or working capital loans) are available to small businesses and most private non-profit organizations. These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The program will provide loans up to $2,000,000 based on need, at a fixed interest rate of 3.75%, up to 30-year amortization, with an 11-month payment deferral. Companies can apply online at SBA.gov/Disaster.
  •  WEDC Grants – Last week, the Wisconsin Economic Development Corporation (WEDC) created the Small Business 20/20 Program (SB20/20). This program will provide grants of up to $20,000 to targeted businesses with no more than 20 employees to cover rent and to meet payroll expenses, including paid leave (including sick, family and other leave related to COVID-19).  The grants will be administered through the state's 23 community development financial institutions (CDFIs). WEDC plans to identify the participating CDFIs within the next two weeks
  • Coronavirus Economic Relief Package – Not yet passed by Congress, but expected to be enacted this week, this legislation is reported to contain $350 - $500 billion in loans to small and medium-sized businesses that have been impacted by the coronavirus outbreak. Details of this plan are yet to be unveiled.

Taureau Group Overview

Taureau Group is an independent boutique investment bank providing merger and acquisition services to lower middle-market companies throughout the world. Principals of Taureau Group have successfully completed hundreds of M&A transactions for a wide array of clients in virtually every industry. Transactions typically involve closely-held and family-owned businesses, and private equity firms with transaction values ranging from $10 million to $150 million. Taureau Group combines the capabilities of large, bulge-bracket investment banks with the service and responsiveness of the middle-market.

Please contact any of our experienced M&A professionals here to discuss how COVID-19 may impact your M&A strategy.