Search fund and covid19

April 20, 2020

by a searcher from Columbia University - Columbia Business School in Zürich, Switzerland

Hello,

with covid19, many otherwise healthy companies will see their number turning red for this year, and maybe more. This will pull them off the searchers target list, and they will not match key criteria’s anymore like steady growth or profitability, reducing significantly the potential number of target.
I’d be interested to hear from investors if they would consider investing in a company that has been doing well till the Covid crisis and then saw their number worsen, hopefully temporarily. How would you react if proposed this kind of deals? What key criteria would you require to ci it je the conversation ?

Reply by a professional
from Simon Fraser University in Toronto, ON, Canada

My advice; Focus on specific opportunities and rethink your investment criteria; Is the sector considered an essential service by the government authorities? How has the sector performed in March and April? Who are the target companies end customers/buyers? As a potential acquirer/investor do you have visibility into a companies results since and during the pandemic?

Reply by an investor
from New York University in Westport, CT, USA

This year is not about growth trajectory or expanded profitability. It's about survival for many businesses. to answer your question is difficult without a specific case. More challenges will come up in the near future. i would look at this on a case by case basis

+1 more reply.

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