Horizons Fall/Winter 2020

INDUSTRY UPDATE MERGERS & ACQUISITIONS

Looking Ahead at Mergers & Acquisitions by Ben Barnes, CPA, CGMA, Jeff Sackman CPA, CM&AA, CGMA, & Michael Bean, CPA, CFA T he COVID-19 pandemic has led to a reduction in the number of mergers and acquisitions taking place in the economy. Current Environment Based on our experience working on transactions in the current environment, several common themes are emerging.

Uncertainties around further shutdowns, spikes in the number of new cases, and the timing of a vaccine have made it difficult to predict near-term business results. Additional challenges conducting due diligence and raising debt financing have led to buyers delaying or reducing their acquisition plans. We expect many buyers will continue to remain cautious until the pandemic is over.

The time-line to complete an acquisition/sale has increased significantly. There are several reasons for this. For most deals, the buyers are content to allow extended due diligence times to fully assess how the company is emerging from the pandemic. We expect the time from the signing of a letter of intent to a signed purchase agreement to remain extended relative to pre-pandemic deals. Additionally, the use of earn-outs is becoming a more frequent tool to provide some protection to the buyer that the

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