Thinking of Selling Your Technology Business? Tech M&A in the Time of COVID-19 (part 4)
This is the fourth article 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 4: The good news for technology M&A
Where does this information leave you if you are about to begin a tech M&A process, or if you are worried about the impact of the crisis on the closing phase of your process? Are buyers likely to engage in an M&A process right now?
How should I proceed?
- If you were considering an M&A process, don't panic. Markets always come back – as they did after 9/11, after the Lehman bust, and after various currency crises and regional conflicts that affected the markets. The more important question regarding the comeback is the curve shape: will it be a V? a U? a short dip? will it feel a longer-lasting impact?
- If the revenues of your tech company are impacted only short-term, wait and ride out the next two quarters, using that time to prepare. Consider going to market in 2021 and start doing your homework immediately: prep the company, the documents, do some research because we can expect M&A activity to pick up again as soon as this crisis is over. In that respect, the big question will be: who will be the first to reach the doorstep of buy-side M&A teams?
- If your technology company's revenues will be impacted for more than just the next quarter, make your company resilient using government support packages to help your company survive the current disruptions, and don't go to market. Instead, have the numbers ready to show that, although your company may be in an affected sector, you'll soon be in good shape.
- If you technology company shows stable or increasing revenues, go to market now. Buy-side M&A teams are not as busy, so they're willing to look at new opportunities.
Buyers are more active than you think
It may come as a surprise to hear that we've received emails and calls every day from financial investors in particular who are looking for opportunities, telling us: "We are still open for business, send us everything you have. We've continuing to invest. We have a lot of dry powder and we want to spend our investors' money because we need to return it with a handsome profit in a couple of years' time. Please send us deals!".
Even M&A departments from strategic technology buyers have reached out asking whether we have any targets for them.
The best news of all is that you might also get a higher valuation if you're surviving and making the most of the crisis, since we're in an unusual economic situation and a business model that is coping well might gain an extra premium.
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.
Wednesday, 12 August
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/.