This article also appears on my M&A blog on Forbes.
Until last week, my job involved a lot of travel and conferences throughout North America. The highlight? Meeting energetic, dynamic business owners and listening to their plans and goals for the future. For me, business is about the people you engage with. It’s about connection.
How fast things have changed.
Physical contact has been temporarily substituted by digital conferences and video meetings. Alas, as useful as it is, an online PowerPoint-sharing session just isn’t the same experience as meeting over coffee, but it’s the safest option we have right now.
In business and in our daily lives, we are being forced to adapt to vast changes at a frightening speed. Understandably, there is fear for the future.
Of course, though this crisis is absolutely daunting, we have faced challenging times before. I was in midtown Manhattan during 9/11. Several colleagues lost love ones. Quite a few lost access to their homes. The country was in a state of shock.
Most of us – many of my clients – were also severely tested during the Great Recession that officially began in December 2007 and officially (but not really) concluded in June 2009.
There was Black Monday in 1987.
And the list goes on …
But every time we have managed to rally and find our way out.
Today, along with the extraordinary health crisis, the economy is rapidly eroding and our routines have either been completely disrupted or are about to be.
But now more than ever, I’m reminded of what my company’s Founder, Brian Rebbettes, said to me back at the height of the last crisis in 2008. “Fear is the enemy here. And planning is the way to beat fear.”
He’s right, of course. From a business transaction perspective, the world has not ended and opportunity will exist just around the corner. There will be setbacks but also positive news that will re-enforce our hope for the future. This is the new normal, at least for the next few months. It is already apparent that Federal, State and Local governments will intervene massively. The private sector is adapting rapidly in positive ways such as modifying the supply chain and getting medical products to the healthcare providers who need them.
From an M&A perspective you can expect a pause in large strategic combinations — the types of mergers that created Exxon-Mobile or United Technologies’ purchase of Raytheon or the Heinz purchase of Kraft.
However, the middle market for private companies (where my clients and my firm, BCMS, live) will continue to be active if at a more modest level versus last year – we completed a transaction involving a manufacturing company on the day I am writing this article and another one is on schedule for this week – and more so when the dust begins to settle. The companies that navigate through the current turbulence financially and operationally will continue to be attractive to the thousands of private equity groups with their near $1.5 trillion dollars of invest-able funds. They will undoubtedly remain on the radar of the many public corporations and larger private companies seeking access to your clients, your products and the services you provide, your distribution channels, your human capital, and even your location. Your business might help them build their own path out of uncertainty, and back into growth.
As we have in the past, we advise our clients to lay the groundwork now, so they are ready to approach the market when the timing feels right, or to respond to a buyer who approaches them. While making exceedingly difficult decisions involving your companies and employees, also prepare your business if you are considering a sale of your company at any point in the future.
Whenever I speak with potential clients, one of my first comments to them is that we have achieved continued growth and global expansion throughout economic cycles. People who have been around for long enough understand the message. The point is stability – we do not panic. Because markets tighten and relax – because a buyer or opportunity can manifest at any time – you always have to be prepared. You have to be ready.
Do that, and you will certainly get ahead of potential buyers waiting for the markets to calm. You will get ahead of this crisis and be ready for the results of the fast-approaching 2020 election.
You have to take action while others are sitting on the fence, so you are out front. You want to be ahead of potential buyers so when they decide they are in the market, you are ready to interact with them.
The time ahead will be dynamic. While nobody capitalizes on all opportunities, the most successful people are prepared. Be one of those people.
Read more of my articles on my M&A blog on Forbes.