Covid-19 has been quite a shock to the system, grinding the world to an abrupt halt and causing economies to nose dive.
All over the world business owners are grappling with the after-effects of Covid-19 and have never been as busy. Your business, which was built to be on autopilot for day-to-day tasks, now requires you to rethink many processes and often only the business owner or senior management can deal with these new issues.
What we need to try and avoid, in this “new busy”, is losing sight of the opportunities that Covid-19 presents.
Identify Post Covid-19 Opportunities
It is possible that your business and industry may now be better positioned to grow post Covid-19. Many industries will be bigger and more profitable, for example, online retailers. Other industries such as tourism will eventually return to something similar to the old normal, and those industries that are structurally worse, will need to re-invent their business models to be relevant post Covid-19.
In addition, the cost of debt and business valuations have dropped significantly and may stay at these levels for a while, creating a window of opportunity to grow significantly. If your business is in The Winner category or is positioned to return to the old normal, then your planets may have lined up and it is time to attack the market. If you are game for this challenge then the two questions you need to answer are:
- Where to invest your money?
- Where to get the capital?
When deciding where to invest, you might already have specific industries, markets, products, or competitors in mind. If not, some focused strategic planning and research should identify good opportunities. Involving a transaction advisor is always a good idea—they can review the logic of the acquisition/merger, advise you on each step of the deal, and maintain your confidentiality. An intermediary can also often engage more easily with potential targets, gather high-level information, and ensure that the deal makes sense.
Fund The Deal
Raising funding is not rocket science, but it does require a fair amount of grunt work.
A good story is needed, backed by a clear, well-organised set of financial numbers that address funders’ key questions, especially about cash flow.
The financial model should be robust and clearly support the rationale of the deal. It needs to be straightforward enough to understand—avoid overly complex models—yet detailed enough to accurately reflect reality. It should include the proposed funding structure and be built in a way that key assumptions can be changed to test sensitivities. It should be built using best practices such as separating inputs, calculations and outputs and the model should reflect ratios important to debt and equity funders. The model should include a balance sheet, income statement and cash flow, the so-called three statement model (“3M”).
Agilequity can help you identify potential targets, sense check the rationale, support you in approaching and negotiating with the target, build a fit for purpose 3M model and raise the funding to take advantage of existing opportunities. We are flexible in our approach and are happy to provide the full service or support for your existing resources to do the work themselves.
If you would like to discuss how we can help you, please feel free to contact Andrew Meerburg, the CEO of Agilequity.
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