COVID-19 affected business acquisitions – let’s find out how. When discussing how the coronavirus impacts businesses, people think in somewhat basic terms. They assume the pandemic forces some companies to close or hurts revenues with others. The effects prove more far-reaching. Such effects become visible when looking at how the outbreak affects mergers and acquisitions.
Mergers and acquisitions remain a vital part of the corporate world. Many small business owners benefit from business acquisition deals, as well. Today, however, the landscape for these types of business deals is changing fast. Thankfully, there might be some ways to navigate the complicated situation.
The most obvious question asked amidst confusion from the pandemic centers on whether the coronavirus has led to a decrease in M&A deals – or has it led enterprises to pursue them? Considering the size of the U.S. economy, both upticks and downturns occur. Currently, the economic landscape is not going so well for some sectors but working out tremendously for others.
The airline industry, in particular, suffers immensely from the loss of travel bookings. Boeing recently canceled two business acquisition deals. One deal centered on purchasing a commercial jet enterprise. Commercial flights are not popular right now, so buying a jet business would not seem prudent.
Uber, however, decided to purchase Postmates. Ironically, Uber’s ridesharing bookings are down significantly, as many people do not want to ride in a “strange” car. The pandemic has led to an increase in business for delivery services. Postmates presents an opportunity for Uber to expand its UberEats endeavors by absorbing a competitor, one that handles deliveries of items beyond food.
The tech industry appears to be doing well, as Apple’s stock fortunes reveal. So, ultimately, whether the pandemic hurts M&A ventures does depend on many individual circumstances and specific industries. In March of 2020, it became apparent that the arrival of COVID-19 would lead to a drastic crisis. Not surprisingly, during the early stages of the pandemic, many businesses altered their plans. With many states mandating total lockdowns, altering then-current plans proved unavoidable. M&A deals that were in progress had to pause.
Overall, many enterprises expect to engage in fewer M&A deals in the final quarter of 2020. That said, some sectors may even increase acquisitions. The home improvement industry appears to be doing well. The pandemic has led many to take steps to perform repairs and upgrades.
The pandemic has a cause-effect relationship that could be helpful or harmful. Regardless, executives do appear to operate cautiously, as they do not know what the coming months will bring. The COVID-19 pandemic has created difficult times for many. The United States, if not the world, has shown it can “bounce back” from seemingly dire situations. Roughly 20 years ago, the “Dot-com bubble” burst and brought havoc to the technology industry. As noted earlier, the technology industry appears to be doing quite well right now, overall.
2008 saw the arrival of “The Great Recession,” an economic downturn that devastated the global economy. The eventual rebound saw many global economies do quite well. The United States, in particular, experienced many years of prosperity in a row.
Differences do exist in regard to how companies engage in M&A strategies. At present, a tremendous number of people work from home. These professionals might include a company’s top executives and board members. Social distancing and concerns about safety change the way professionals operate, even when they can continue moving forward with plans.
For some, there may be a bit of awkwardness when adjusting to the changes. Eventually, people will make the necessary transition. Business survival now depends on everyone’s ability to adapt. Specific industries and professions remain essential ones. That means people rely on associated businesses for vital needs. The accounting industry, for example, ranks as essential. People do need to file taxes. Yes, the IRS and local governments provided extension. At some time, however, returns and taxes become due.
If now is a time when you wish to sell an accounting firm or engage in a merger deal, Fusion CPA might help. Bringing an accounting firm into the Fusion CPA fold could be an option for those interested in an exit.
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