The Impact of COVID-19 on Startup Acquisition in 2020 and Beyond
The COVID-19 crisis is unprecedented in both its economic and humanitarian impact, and it’s undoubtedly affecting every business around. Still, if history is anything to look up to, there are some suggestions about how startup acquisition will play out.
The startup acquisition market has contracted, but companies that are open to merging and acquisition typically outperform businesses that aren’t. The only way to rebalance for liquidity and risk is to assess all incoming opportunities for growth and resilience. The COVID-19 may have brought the downturn, but there is a way around it.
A Shift in M&A
The COVID-19 crisis has impacted the world on a massive scale, prompting global responses from businesses of all sizes, including governments. The equity markets are going through swift resets. Deal volume and value have rapidly reduced, causing a series of economic shocks.
With credit and valuations fluctuating, and premium liquidity, businesses are forced to focus inwardly. While crisis hits mega-deals the hardest, smaller startups can still keep their heads above the water by seeking M&A solutions for solvency.
Each business is facing unique challenges, and the moves they make now will significantly impact its future viability. The next few months will be determining for many startups, and startup acquisition will move at different paces, depending on their location and industry and market demand shifts. New-term strategies are needed to create a new future for these companies.
The Need to Rebalance Resilience, Liquidity, and Risk
For many startups, the need to rebalance the business to bridge the gaps in the value chain, mitigate risks, and protect liquidity has never been more pressing. With options potentially limited, it’s critical to devise short-term strategies that will provide immediate responses.
Re-evaluating your current private equity is the best way to identify any potential gaps that demand filling. Even more so, if your startup company recently closed a deal and is trying to realize its value, as there are now quite a few operational challenges involved, such as workforce disruption and reduced productivity.
Industries that have been affected by the impact the most will have to go through a wave of sector consolidation. The key to making better decisions is in understanding the dynamics of potential consolidation for consumers and suppliers alike.
While the crisis environment brings many unpredictable situations, it’s possible to invest for growth by leveraging startup acquisition to acquire intellectual capabilities and property and high-quality talent.
For companies that are in a position to acquire, such actions will determine the level of long-term resilience. For businesses that are about to be acquired, this can help preserve talent and capabilities instead of dealing with imminent insolvency.
Unique Industry Challenges
The first days of the COVID-19 crisis spawned great market capitalization losses in travel and hospitality, retail, consumer goods, energy, banking, capital markets, and life sciences. The only way to properly respond to these losses is to re-evaluate startup acquisition and then act accordingly.
We’re already witnessing fundamental changes in supply chains and consumer behavior, resulting in companies losing their balance at an increasing speed. Even though some of these changes aren’t permanent, it’s more than clear that things will never be the same again.
However, startup acquisition offers a chance to reposition your business to drive resilient growth and beat uncertainty. In fact, there is an opportunity in startup acquisition returns, which is why this crisis is the perfect time to put the acquisition to use.
The world’s business leaders are already traversing the several startup acquisition horizons to expand their scope and accelerate the pace. Leveraging merging and acquisition is currently the best way to outperform all businesses that aren’t considering acquisition as the solution to outmaneuvering the crisis and getting ahead of the competition.
The Now and Beyond
If you’re open to startup acquisition and are looking to acquire valuable companies to grow your business and increase revenue, it all comes down to the moves you make now and in the recent future.
The crisis is a chaotic working environment, and companies need to step up their game. The best way to cope with the rapid changes in the business landscape is to recognize any opportunities associated with the position the crisis places your business in and take immediate stock by leveraging any M&A opportunities that come your way.
Be prepared to make rapid calls on any new alliances, as this is the only way to ensure stability. Look for the startups with capabilities that match your own. Gather all intelligence you can find to foresee how your industry will evolve and how that evolution impacts your efforts for alliances, ventures, and startup acquisition.
You can significantly increase your resilience by realigning alliances and partners to tap into all M&A opportunities and reduce any potential risks associated with the ongoing crisis.
Constantly monitor all potential disruptors and revisit priorities by relying on AI capabilities and advanced analytics to get ahead of your business operations and better assess all M&A opportunities that may come your way.
The only way to properly respond to the ongoing crisis is to get organized to resolve all issues and prepare yourself for any potential M&A opportunities.
With that in mind, Sales Synergy Consulting helps businesses that struggle with growing pains of rapid revenue increases and decreases and coping with the ever-changing working environment that is heavily fluctuating due to the COVID-19 crisis.
We provide M&A consulting services and virtual webinars to help businesses scale up to the newly-developed business environment by optimizing the downsides of merging, stabilizing sales and reporting, and fixing all disconnects in the sales process, revenue and productivity.
It’s hard to stay on track through these difficult times, but with the right consulting services by your side, it’s absolutely possible to get through the crisis and keep your business up and running. Contact us today to get your quote.