Hey Rakan, I have had the same question in my mind for the past few months as I consider undertaking my own search in[redacted]After talking to several of my advisors who are themselves experienced search fund investors, I wanted to share the answers that I have received:

1) From the seller side, there is a pool of sellers who are older founders approaching retirement and accustomed to spending ~20 hrs/wk on their business, but who have had recently spent[redacted]hrs/wk now managing cash and solving problems to COVID-proof or recession-proof their business. With the timeline of a recovery so highly uncertain, there is an argument to be made that, after a taste of economic and pandemic turbulence, many of these folks will be MORE willing to entertain offers now than back in January.

2) From the buyer side, entrepreneurs and investors should not be bidding with an eye for discounted multiple. An ideal target would be fairly recession-proof (and perhaps COVID-proof) to begin with and coming in with a low bid based upon the pandemic will not garner much good will with the seller. From this perspective, not much will change from the buyer perspective save for adding further risk assessment criteria of being able to survive another outbreak or extended quarantine period (i.e. can the business qualify as essential, perhaps operate largely online, open with social distancing, generally adjust keep its employees safe?).

3) From the entepreneur side, even in recessions there are opportunities and those entrepreneurs that are most highly risk-averse and pessimistic may not be willing to continue looking for the right opportunity when things seem grim. Ultimately, there will be successful deals done during this time and the near future and those that are willing to persevere and seek out the opportunities despite the uncertainty will realize an advantage from that.

In summary, I do not think anyone can say for sure what will happen until we see some hard data, but these answers from more seasoned folks make a lot of sense to me and encourage me to consider pursuing a search in the short term despite a number of factors that could be considered discouraging on their face.

Hope it helps!

"Are investors now concerned about the SF model due to the pandemic?"
-Highly levered business are generally more risky, especially a recession or economic down-turn. I don't think there is concern with the model in general/ long-term, but high leverage in these times is very difficult for investors and lenders to agree to. Obviously it all depends on the business / deal though. Some businesses are doing better than others now, but with increased uncertainty, it's going to be harder to come to terms with investors, sellers, and lenders. There's always opportunity, but my guess is that the lending side is the hardest at the moment. You may have to get creative.

"Are searchers that made their acquisitions prior to the pandemic in good or bad shape?"
-Many will suffer and possibly go BK if they have high debt loads. Others may thrive. It's 100% dependent on the business. We run a vitamin brand and are doing well.

"Are the current searchers in better or worse situations?"
-I think it's generally better to be a searcher now compared to if you closed a deal 6 months ago. Of course, this is just on 'average' because nobody ran "pandemic scenarios" in their down-side cases. So even if your business was 'recession proof' it may not be pandemic proof. Again, some businesses are doing well, so it depends.

If you are searching, you probably need to be more conservative in managing your expenses / cash as it may take longer to close a deal because debt and equity will be harder to close.

"Are prospective searchers going to benefit from timing (cheaper deals) or will the pandemic act as a deterrent from even considering this asset class?"
-It'll probably be harder to line up investors to fund your search. Though, you can self-fund your search and find deals. Closing deals will not be easy however. If you have cash equity to close a deal, there will be opportunity. But if you need debt, it will be harder (not impossible). You may need better guarantees, more collateral, less leverage, etc. There may be fire-sales that lead to great opportunity. But, some great businesses may wait to sell if they can. My guess is that this benefits PE funds who can cash-close vs. fundless sponsors & searchers. There will likely be fewer investors willing to 'take a flier" on searchers. If you can convince a deep-pocketed investor to back an acquisition, there will be opportunities. In order to do this, you'll likely need to have a very well thought out strategy and communicate how you plan to take advantage of this 'once in a lifetime' opportunity. A standard search fund pitch may not be enough.

All this said, there's opportunity, but these times are not for the faint of heart.

Thank you for the response Brad, Really appreciate it