Search process timeline + cash burn impacts of COVID-19?

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March 18, 2020

by a searcher from Stanford University - Graduate School of Business in New York, NY, USA

Hey folks,

How are you thinking about how COVID-19 is going to change the length of your search process?

Stanford Selected Observations indicate that the average length is ~19 moths (23 months in###-###-#### How are you thinking about (a) the additional months of downtime with slow transaction volume, (b) the time it takes after that for sellers to readjust their valuation expectations, and (c) the possibility of any additional lengthening in the sourcing or diligence process?

Based on that, how are you thinking about your own runway and cash burn for the search dollars you raised?

Thanks!
Connor

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commentor profile
Reply by a searcher
from Estonian Business School in Tallinn, Estonia
My guess today is that things turn out in a typical stock cycle stages in the following way (cycle stages http://www.marketoracle.co.uk/images/2012/Nov/Stages-for-AAPL.png)
1. “denial” stage, "its not a long-term problem”, “its flu like any other”, “this will soon be over we will prevail”, duration 3-4 months ie till end of July,
2. “late denial, problem solving” stage - during the summer companies ponder and make plans, dramatic decisions are postponed till August
3. “fear” stage, reality starts taking toll and feelings and thoughts like “we have done our best, but nothing seems to work” starts kick in. duration around 12 months, peak period September-April to approach businesses.
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Reply by a searcher
from University of Virginia in St. Louis, MO, USA
My guess based on today's experience --which is probably utterly worthless:) -- is that it will be virtually impossible to even close the deal while this thing is going on. Banks are closed, my broker is closed, can't get through on any phone to anyone because they're overwhelmed. I tried to send a wire today and just couldn't get it done. Government offices for non-essentials will be the same soon if not already.

Look at Italy and take a guess at how long this will last here. And I bet it will be bad in Boston. Eventually key employees will get the virus and be quarantined for a few weeks at a time.

Top all this off and you're even restricted from even operating the business for quite a while. When you do get to operate you may have to hire a bunch of new people.
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