April 1, 2021 at 2:54 am #118654
target companies are hiding behind Covid as an excuse for lower sales or performanceApril 22, 2021 at 4:44 pm #119326
Im not sure, some industries, those that target physical assets such as FM, Renewables, Power, etc have shown resilience to their sales but have seen an impact to there GP and therefor EBIT/EBITDA. This is due to the fact that covid subsidies have ben employed for their people in some geographies which hits their SG&A after cost of good sold. this, in my opinion should be stripped out as a one-off cost, although some businesses have been impacted for over a year now.April 23, 2021 at 12:25 pm #119332
At my firm, we have adopted the philosophy that COVID’s impact on revenue and EBITDA are a Force Majeure or an act of God or war. Like a hurricane, it is a one-time impact on business results. The period of time that this Force Majeure impacted varies by industry (and company) so we substitute historical financial results for the same period in an attempt to normalize results for business valuation purposes.May 9, 2021 at 9:18 pm #119617
I am working for an IT consulting firm. Covid did not have significant impact on our revenue due to following reasons:
– We have cutting edge IT / digital infrastructure and devices
– We used hybrid / virtual work even before Covid (Zoom/Team calls, SharePoint collaboration, etc.)
– As soon as Covid came, we went 100% digital by using Cloud collaboration tools
– We were able to lower our consulting fees (due to zero travel fees – no hotels, no flights)
– Well managed Covid internal communication and preparednessMay 22, 2021 at 1:47 am #119951
The Acquirer would not rely only on the pandemic year to assess the target company. Along with Covid year, last 5 years financial performances of the target company, Earnings quality, abnormalities, one-off transactions, management working style, commercial, operational and many other DD would be considered. So just one year performance would not significantly be a decision-maker. However, if the company is on the verge of bankruptcy or has a going concern, for instance, many chain restaurants businesses severely affected by COVID, in that case, terms of M&A will be based more on the future viability of the business and commercial DD (market/business model) will have more weightage.June 14, 2021 at 5:07 am #120522
McKinsey recently released this paper:
I suggest to read it. Covid has been everything from disastrous to accelerating business growth to unprecedented levels.June 26, 2021 at 5:49 pm #120759
Muhammad Afaq Bin TariqParticipant
The impact of covid on commercial due diligence as some companies have shown really high gains during the pandemic period which could hide companies’ real organic growth. This could also distort the overall valuation for companies.
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