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Corporate finance during the pandemic

How the Covid-19 pandemic and the lockdown have affected the world of M&A.

July 14, 2020

Having recently completed another transaction, and with more businesses now opening after lockdown, we think it is a good time to share some thoughts on current M&A activity.

Our most recent deal was the sale of the Martindale Group – an international manufacturing company with a 140-year history, based in Birmingham, with additional operations in Thailand and Ghana. As deal advisors, this transaction is part of an overall pattern of reassuring levels of M&A activity. 

Although we have worked through previous recessions, including those of 2001 and 2008, the speed and severity of this year’s downturn feels like uncharted territory. It is hard to forecast what the longer term impact of the virus and the lockdowns might be on both the economic as a whole and on deal activity in particular. And, needless to say, the human side of the crisis has been of far more concern in recent months.

Looking back on the second quarter of 2020, here is what we have observed. 

Sound transactions have continued to go ahead

Those transactions that were always sound long-term strategic decisions have still proceeded, just more slowly. Having built momentum over months or even years, the current hiatus can be viewed as a blip rather than a fundamental shift.

Cash has been available from both public and private markets

Stronger companies, with good prospects for weathering the storm, have had access to plenty of equity finance through the public markets. Private Equity firms have also been willing to top up the cash reserves of their portfolio. Having got through the lockdown, many companies are now able to return to focusing on growth. Some are also repaying ‘rescue’ funds that proved unnecessary. 

Both Private Equity firms and trade buyers have shown interest in bolt-on acquisitions. Private Equity firms have also continued to raise new funds, and the need to deploy capital is leading to increased volumes of outbound deal searches for new transactions.

Subsidiaries are up for sale

Businesses or groups with weaker balance sheets are being sold or broken up. This is particularly true of highly-geared groups who have grown through debt-funded acquisitions. Strong subsidiaries and non-core divisions with good long-term prospects are coming to the market and successfully finding acquirers. 

Of course, there are also business failures in sectors including leisure, retail and travel. Whilst these represent the most negative end of current activity, for turn-around investors this may be a good time to be active in the market.

Technology is being used to keep transactions moving

Most M&A professionals were already accustomed to remote working, relying on video conferencing and online data rooms for cross-border deals. Recent events have only served to enhance this ability to collaborate remotely and made confidential meetings with multiple parties easier and more common. For business owners seeking comprehensive advice from corporate finance advisors, lawyers, tax specialists and others it has never been easier.

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What our clients say

  • QuestGates is a complex business and we had very set ideas of what we wanted to achieve. Rockworth were patient and supportive throughout and were always available to support and help, challenging where need be but always looking for solutions not problems. We could not have achieved the investment that we wanted without their advice.
    Chris Hall
    CEO, QuestGates
  • Thank you all for your excellent and urgent support in finalising our deal.  I appreciate that it was all rather late in the process - but you never flinched once. Your ability to get up to speed so quickly and provide great intervention and solid guidance is a credit to your professionalism. I was particularly impressed with your patience in providing expert help at a time when our stress levels were running high.
    Stewart Hollington
    Director, Analytical Services International
  • Time and time again as we went through the process, I was relieved that we had Rockworth at our side. They have excellent contacts and were able to unearth a wide range of suitors for the business.
    Neil Cameron
    Co-founder, CHL Software
  • The relationship we have built with Rockworth over the last five years helped to lay the foundations of a smooth and successful transaction. Selling a company I have built up over the last 20 years comes with some mixed emotions. It has been quite a journey. But I am delighted with the outcome that Rockworth helped to achieve, and I am looking forward to seeing the business continue to thrive under new ownership.
    Dr Donald Gibb
    Founder, The Birth Company
  • Thank you for your hard work and trustworthy advice on this deal - your focus and patience have been incredible. I've been hugely impressed at all stages on how you've guided me through this process, and how you've kept cool heads when it must have been very challenging to do so. Extremely happy to recommend Rockworth.
    Andy Crysell
    Founder & CEO, Crowd DNA
  • Thank you everyone at Rockworth for your guidance, advice and pragmatism during what has been a very quick turnaround. It has been a pleasure.
    Andy Whittard
    Managing Director, Cherwell Laboratories Limited
  • Rockworth provided the support, experience and the technical knowledge that we needed to secure a successful sale.  Lawrence and his colleagues are all high calibre individuals, and I would certainly recommend them.
    Alice Watson
    Founder, Porge Research
  • During the whole process the team at Rockworth was always available to answer questions, no matter how banal, and held our hand throughout. I can honestly say that without the Rockworth calm hand on the tiller I am not sure we would have got through it in such an easy manner.  
    David Bilton
    Director, CadCam Technologies Limited
  • We chose to work with Rockworth on the basis of their approach, networks and reputation. Lawrence and his team provided excellent support throughout the entire sale process and enabled the company to achieve an outstanding result. Whilst there was a great deal of complexity at times, it was managed with great care and my colleagues and I enjoyed working together with the Rockworth team throughout. I would have no hesitation in using Rockworth for future transactions and would recommend them very highly to others.
    Martin Lucas
    MD, Kittiwake Developments Ltd
  • I would like to thank you and the team for the major contribution you made to the sale of Cromptons Healthcare. It turned out to be a very complicated deal and I have to say I was staggered by the commitment and effort that was required from us all. I was impressed by both the professionalism and the support that Rockworth provided, which proved to be absolutely essential to me. I had not fully appreciated beforehand just how necessary that support would be.
    Martin Calhoun
    Owner, Cromptons Healthcare Ltd
  • Lawrence, many thanks to you and the members of the Rockworth team for achieving such a great result. It is the best possible outcome we could have achieved, both for ourselves as shareholders, and for our staff, ensuring not just the continuation of the company but positioning it for further growth. We were very pleasantly surprised at the range of potential acquirers that you introduced us to - we had no idea initially of the types of acquirer that you would manage to find from outside our direct industry.
    David Black
    Managing Director, Young Black IS Ltd
  • Rockworth was the ideal guide and partner in our search for a buyer for our company. Their process, insight and people skills were the perfect antidote for our inexperience and were a major factor in achieving the smooth path to our desired outcome. From the start their approach suited our needs as a privately owned company with limited resources to run the business and undertake a transaction. They were invaluable in helping us understand what was needed and what we might reasonably expect. I cannot recommend them highly enough.
    Tim Champion
    Managing Director, H.Squared Electronics Limited
  • From initial preparatory work and advice through the deal process and to final completion, we found your work to be invaluable. I was particularly impressed with the careful and thorough management of the due diligence process: the consistency and detail-oriented manner in which this work was carried out was much appreciated and ensured that the deal completed smoothly, even accounting for the different languages and countries involved.
    Fabio Antoniazzi
    Founder, La Credenza Ltd
  • As a family-owned business, it was extremely important to us that we had an advisor who took care and paid attention to the detail of our business. Lawrence and his team demonstrated real commitment to the deal, both in researching appropriate potential acquirers and following this through in a diligent and extremely supportive manner. I know that without Lawrence and his team we wouldn’t have achieved the successful outcome that we did.
    Rachel Bush
    Owner, Bush & Company Rehabilitation Ltd

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