BOSTON, MA — The management of sound is increasingly important in our daily lives to communicate and tap our senses, while offering protection as the environments we live and work in get ever louder and less comfortable. While not immune from the coronavirus-related shutdown and resulting economic slowdown, the underlying needs of the industry will remain when individuals return to work.
Capstone Headwaters has released its Audio & Acoustics Mergers & Acquisitions (M&A) Update, reporting that amid the COVID-19 shutdown, some segments suited to working from home have seen an uplift while others related to venues, travel, and face-to-face contact have had a much harder time. Key points covered in the report focus on:
- Sound & Communication
- Sound Mitigation & Protection
- M&A Activity Pre-COVID-19
- COVID-19 Pause
- Sound Market
- Financial Characteristics
- Future Trends
- Firm Track Record
- Leadership Through COVID-19
According to the report, future M&A Activity will be impacted by:
Companies turning attention inward to address operating challenges and strategic buyers become increasingly tactical. — Financial buyer private capital seeking investment is again at record highs, and while new fundraising can be expected to fall, private equity has plenty of capital at their disposal. In the short term we expect to hear private equity groups repeat phrases well-worn from the last recession of “prioritizing capital and attention to the current portfolio” together with “seeking opportunities for special situation funds.” That is, until they again rush headlong to put money to work.
Greater caution shown by capital providers — The lifeblood of the economy is credit availability and we expect lenders will grab their recession playbook from the shelf, dust it off and do what they have done before, albeit with greater government support. We are encouraging borrowers to: maximize liquidity, engage with existing lenders, and prepare materials including scenario planning, sensitized models, cost analysis, and mitigation plans. Even with government assistance we expect to be helping companies negotiate with banks and raise capital as providers seek to minimize exposures.
Founder seller motivations shifting in a downturn to: satisfying cash requirements; wanting to avoid pressures of owning a business through another downdraft; and business simply not being as much fun anymore.
Read the full report here or for more information, visit capstoneheadwaters.com
