Corona virus for actively searching searchers - what are you doing now?

March 17, 2020

by an investor from University of Commerce Luigi Bocconi in London, UK

Hi all, i have done a classical SF myself and now privately invest into SFs widely. Having spoken to many of "my" SF searchers, it seems many searchers who have raised funds for the search and not acquired yet are shifting their day-to-day work due to corona virus. Travel is restricted, people don't want to meet, etc. etc. so some are focusing on research and preparing proprietary dealflow that can then be deployed once corona passes.

if you are an active searcher, what are you doing now? hope shares here will help all active searchers - and perhaps inspire some soon-to-be searchers to frontload some work from their search. thanks! tobias

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Reply by a searcher
from INSEAD in Los Angeles, CA, USA

I see this as an opportunity. Multiples should (finally) go down along with the downward trend in the listed stocks. Other non-institutional buyers might prefer to sit out the calamity, hence creating less competition amongst buyers. Borrowing money will become (even) cheaper as central banks are pushing down their benchmark rates. A credit crunch is a risk as banks might decrease lending to SMEs but G7 countries are promising big stimuli to prevent this from happening. I do suspect that it will take a while for sellers and brokers to face the new reality which will reduce activity on the short term. They might also immediately bin the letter or email they get as they are probably worries with hundreds of other issues that covid-19 has created for them. But as you mention, it's a good time to get the proprietary process right. Oh, another good thing, the interns no longer have classes so they have more time to focus on the search funds :) My team is super motivated, and we're greasing our search engine :)

Reply by a searcher
from The Hong Kong University of Science and Technology in Sydney NSW, Australia

I am preparing to launch a search fund, and will continue to search in the target industry and meet people privately. Coronavirus pandemic has created more acquisition opportunities along with more challenges. Business environment is going to be tough. this means competitors are also operating in the same tough environment. I am spending more time on contingency plan and supplies, to make sure the acquired company will adapt, survive and thrive if acquisition happens during the pandemic. If competitors in the industry can't adapt and eventually go out of business, it is a natural way to expand the market share.

The target industry is going to be quiet during the pandemic. This means the business owners are more accessible. They would be busy otherwise, and wouldn't even consider selling the company.

My strategy to grow EBITDA is in business transformation. It does not rely on the increase of market share. but an increase in market share can help us to advance further.

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