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!