Park Place Technologies has been fortunate in that COVID has not really affected its M&A process at all.
“We still have a pretty robust pipeline,” the company’s President and CEO Chris Adams says. “I would say it's been pretty business as usual for our industry.”
Through conversations he’s had with investment bankers, Adams says some businesses are booming right now, and there's a lot of activity in M&A in those industries. The ones that have had to ramp up to provide support to those dealing directly with the COVID pandemic, whether it’s the production of masks, or health care industry-type services, some of those have really skyrocketed, attracting a lot of M&A activity. Other areas, however, have slowed.
Where deals would be considered neutral — that is, feeling no significant impact one way or the other from the pandemic — he says buyers have tried to push the price down to take advantage of the circumstances, and that has sellers sitting back and waiting until sale conditions improve.
“I think there's still a lot of M&A activity out there. I just think instead of a balanced approach, it shifted by industry,” Adams says. “Some Industries have slowed down or stopped, some of them have really accelerated. Net-net it's maybe a little bit down, but not a lot.”
For those businesses that are doing well despite (or because of) the pandemic, there is some leverage. Adams says he’s heard of some pretty aggressive pricing on some of businesses, particularly in health care and health care services, and some other areas that are booming because of the circumstances.
“Some of them are doing really well in this economy because it favors their business model and I've heard that they're getting premiums right now,” he says.
Adding another element of potential market disruption is the upcoming presidential election. Adams says if he were a seller, he’d be trying to get a deal done now. But as a buyer, he’d want to see the outcome of the election before doing a deal.
“When you buy a business in a strong economy, you expect certain returns and outcomes,” he says. “If you can't rely on that economy to have the same horsepower, I think you would change your modeling on businesses you’re buying and you may want to wait and see what happens before you price something because you could end up pricing it cheaper a day later, a week later, a month later, right after the election. So I do think it will affect both parties in the process — that the sellers would want to get something done, the buyers may want to wait and see what happens.”
Adams spoke on the Smart Business Dealmakers Podcast, offering his sense of what’s likely to be on the minds of dealmakers through the balance of a year plagued by uncertainty.
Listen to the podcast
