Corona - Part 1

Corona, Compa­ny Sale & Now? Part 1

Caesu­ra for fragi­le econo­mic growth in times of Corona. 

It’s 2020, we’re halfway through the year and the days are getting shorter again. If someone had told you in 2019 that the entire world econo­my would be paraly­sed for two to three months next year, I suspect you would have called him or her crazy.

I feel literal­ly crazy about the fragi­le pillars on which humani­ty has built this so complex-network­ed global econo­my. The fragi­li­ty of our global econo­mic struc­tu­re is barely apparent when only the most urgen­tly needed goods and services can be called upon for a few weeks.

I ask myself the questi­on, what conse­quen­ces can be derived for the sale and purcha­se of compa­nies, looking back at the last weeks and months. Is it even permis­si­ble to look back now? Becau­se somehow there is always the threat of the next wave when the summer is over. And then perhaps the third or fourth? Who knows?

Is the M&A party really over?

On 30 April, the Finan­ce magazi­ne ran a lurid headline “The M&A party is over” to express that the M&A market - i.e. the market for the sale and purcha­se of compa­nies - had come to an end. As a player in the adviso­ry market, this makes you think for a moment. And every entre­pre­neur who would have liked to take the laurels he has earned from his entre­pre­neu­ri­al life may get a queasy feeling in his stomach and ask himself: “Will I even find a buyer?

Dr. Micha­el Drill (CEO at Lincoln Inter­na­tio­nal) blows the same horn in an artic­le in the Unter­neh­mer­edi­ti­on of 24 April and, based on the experi­en­ces from the finan­cial market crisis of 2008/09, expects a collap­se in the number of transac­tions of over 50% for Germa­ny in the first half of 2020.

On 10 June, we met in the succes­si­on expert circle of the German Associa­ti­on of Small and Medium-Sized Businesses (BVMW). The experts on the scene for smaller SMEs gathe­red there came to a more positi­ve pictu­re overall. The money is still available on the market, Corona does not yet play a role in the succes­si­on and hando­ver proces­ses, and there is an increased demand for compa­nies that have shown themsel­ves to be crisis-resistant.

Nicolas Rädecke, of the Deutsche Unter­neh­mer­bör­se (DUB), noted that buyers across all sectors came back in mid-March and now more sellers are also resum­ing activity.

The market for the sale and purcha­se of compa­nies is breaking free from shock rigidity

I think the market has paused and is now recove­ring from its shock rigidi­ty. As in the stock market, psycho­lo­gy plays a big role in the M&A scene. That’s why I don’t want to add fuel to the psycho­lo­gi­cal fire of the M&A market and further heat up the situa­ti­on negatively. I plead for a diffe­ren­tia­ted view. Becau­se only this will help you as a buyer or seller.

Image: Fotolia.com

TIPS for further reading: 

Selling construc­tion compa­nies - is it worth it in the construc­tion boom?

Selling a compa­ny in the IT industry

Is business succes­si­on an oppor­tu­ni­ty for founders?

The coope­ra­ti­ve model - when employees follow in the foots­teps of the compa­ny founders!