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Thinking of Selling Your Technology Business? Tech M&A in the Time of COVID-19 (part 3)

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This is the third in a series of four blogs on the impact of COVID-19 on technology M&A written for those considering or in the process of a technology transaction and how to take advantage of the current circumstances.
 

Part 3: Who are the COVID tech winners and losers?  

While several technology industries have been deeply affected by the COVID-19 lockdown measures, for some industries new opportunities and business models have arisen.

 

Who will benefit from these changes?

What's our take on the current prospects for tech M&A? 

Given the effects of the current lockdown measures across Europe and the world in various areas of the economy, sectors such as food delivery, home fitness, social networking, remote working tools and streaming are all thriving. 

These areas will pick up as people's behaviours continue to change over the course of the COVID situation. 

More broadly speaking, in the long term we are likely to see an acceleration in favour of e-commerce, digital commerce offerings, software and tech-based solutions – especially tools that facilitate online proximity such as e-learning technology (as thoseof us with children will know!). 

 

Detrimental effects on certain industries

Every technology disruption or paradigm shift, however, includes losers. 

Offline retail, event organisation and online ticketing; hospitality, restaurants, hotels; automotive, transport and especially airlines – and therefore oil prices – are plummeting for obvious reasons. 

Because of this, some buyers are placing current transactions on hold.

As reported in the press, in recent weeks Triton, a major private equity company, was in negotiations to buy lastminute.com. Triton is now trying to trigger the "material adverse change" clause to abandon the process – unsurprisingly, since travel is not doing well right now.

Similarly, Oxford International Education Group, which was going to buy a company that recruits Chinese students to universities around the world, is reconsidering whether they feel confident in pursuing the transaction.

 

Technology M&A advice

Aside from the immediate winners and losers, what does this mean for the overall market?

Various technology deal databases show us that there are still as many transactions as in previous months. The bigger question is: what is the impact on valuations? The final verdict will come weeks into the future because there is always a time-lag in deal multiples being reported.

In future updates of our webinar series (below) we will have more reliable data.

Keep an eye out for our last blogpost in the series tomorrow which will cover our recommendation as technology M&A advisors.

 

Continue: part 1 | part 2 | part 4

 

Update on Tech M&A During COVID-19: Webinar series

Join us for a regular update and Q&A webinar.

Hampleton's Miro Parizek, Dr. Jan Eiben and Anton Røthe will deliver an update fresh from the market and answer your questions about selling your business in times of #COVID19.

Next session: 
Wednesday, 12 August
14:00-14:45 CEST

Sign up here: Update on Tech M&A During COVID-19 - Hampleton Partners Webinar and Q&A | August 12.
Download our M&A reports: https://www.hampletonpartners.com/reports/.

 

This article was published by:

Jan-Eiben

Director

Dr. Jan Eiben

Jan is based in Germany. His career over the last 15 years includes extensive experience in international M&A projects of various industries on the buy and sell sides. In addition, he also worked as a management consultant advising corporations, family businesses and start-ups in strategy and organisational development projects as well as succession management.

Jan holds a PhD and MSc in Business Administration and Economics from WHU - Otto Beisheim School of Management with exchange semesters in the USA and Canada. He is fluent in German (native), English and French.