The pandemic spotlights emerging targets for M&A

Theories about the potential shape of the post-COVID-19 economic recovery span the alphabet—L, U, V, W and Z, along with their cousin, the Nike “swoosh.”

The likely reality is that each sector will experience its own economic journey to a new normal. While travel and tourism, hospitality, oil and gas, and enterprise health care must fight their way back in their own ways, investors and company owners say that specialty sectors might enjoy a “J”-shaped recovery in which they not only bounce back but reach new heights.

Not every business has suffered as a result of the coronavirus. Zoom and Netflix are two well-known examples of companies that prospered while everyone was stuck at home. Midsize companies that proved to be “essential” during the crisis and those with strong technology platforms are likely to be attractive targets for mergers and acquisitions.

At the same time, those that took a beating but stand a good chance of recovering after the dust settles could be strong candidates for M&A, if they play their cards right.

“As investors, we’re looking at companies that will take a hard hit but that will probably bounce back,” says Jeff Sands, a managing partner at turnaround firm Dorset Partners, based in Dorset, Vermont.

Companies that trim their sails to get through the storm will earn investors’ trust and dollars, while those that try to outrun the gale will likely fail. “Some companies will try to hold on to the past,” he says. “But a few will find a way forward and survive.”

Read the full article in Middle Market Growth magazine: