Investments, mergers and acquisitions The impact of Covid-19 on mergers and acquisitions, private equity and venture capital
This is a unique time for the consumerfacing sector, with widespread disruption simultaneously leading to the collapse of businesses and the emergence of new trends and technologies. Amidst the uncertainty, there are opportunities for private equity firms and investment funds to capitalise, as well as for businesses to develop their portfolio with mergers and acquisitions.
example, Blackstone agreed a £120m deal to buy a portfolio of logistics sites, rightly predicting a boom in ecommerce in response to Covid-19. At the beginning of April, EQT acquired the French industrials group Air Liquide, which produce a range of hygiene products including hand sanitisers, and in May, KKR acquired a majority stake in the US multinational beauty company Coty for $3bn – a figure well below what Coty was valued at pre‑crisis.
Private equity
Despite evidence of funds taking advantage of lower prices, research from The MBS Group found that funds are not interested in distressed investments. Private equity funds are looking to help repair the balance sheet of businesses that had a strong EBITDA before the crisis, rather than snapping up distressed businesses and overseeing a whole company turnaround. Funds told us that they felt that companies which were distressed pre-Covid-19 are unlikely to survive in the ‘new normal’, unless they can access packages of state support. For funds looking to invest in the consumer-facing sector, a strong digital proposition, a healthy pre-crisis EBITDA and a clear purpose are all necessities.
This is a unique time for private equity funds. Over the course of Covid-19, we have seen funds increase levels of engagement with their portfolio businesses, while simultaneously watching the market for investment opportunities. Indeed, recent research from The MBS Group found that 69% of funds that operate in the consumer-facing sector are either ‘very likely’ or ‘likely’ to invest in our industries in the next twelve months – with funds highlighting the digital, food and drink and beauty spheres as key areas of interest. We have already seen this play out, witnessing funds making bets on certain sectors, or else capitalising on the economic fallout of Covid-19. At the outset of the crisis, for
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