The pandemic has had a chilling effect on the M&A market, decimating value in many companies and pausing transactions. But, according to Bob Campana, CEO of Campana Capital, that shouldn’t be enough to freeze dealmakers.
“If there's a great company out there and you can get it for a fair price, I wouldn't allow this to get in the way,” Campana says.
Some companies are thriving, but, as Campana sees it, those are outliers. The great majority of companies have been impacted by the pandemic, which means a lot of the people who would consider selling right now are instead sitting on the sidelines because, “they think the wolves are out and they smell blood in the streets.”
There’s still a lot of dry powder out there and buyers are eager to activate it, whether that’s for a company that’s struggling to regain its footing after taking a punch from the pandemic or to secure a great deal. He cautions, however, that buying a company now should be done with more prudence.
“There are new concerns and new realities out there that your lawyers and accountants are certainly going to counsel you on, on both sides of that deal,” Campana says.
Mitigating risk in deal terms takes balance, and common sense — if buyers or sellers try too hard to insulate themselves from risk, it could make transacting impossible.
"Some people can push the pendulum too far and the deal’s not going to get done,” he says. “It's all about being reasonable. That's the most important thing in a deal — price and terms and your covenants. If you're not reasonable, you're going to kill the deals. Just because we have a new paradigm doesn't mean you can't reasonably negotiate through those new issues.”
Campana spoke on the Smart Business Dealmakers Podcast about the state of dealmaking and when he expects anything like “normal” will return to M&A.
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