Pandemic Pandemonium and the Return of M&A

The past four weeks have impacted humanity and the financial markets in unforeseen ways leaving many people wondering what is next. Despite the tragic consequences that COVID-19 has caused to various countries and the personal impact on our lives, Intrepid remains optimistic that we will rebound from this on a social and economic level faster than other crises for several reasons.

To frame our analysis, we gathered quantitative and qualitative data surrounding the Great Recession of 2007-2009 and the Dot-Com Bust of 2000-2002. Based on relative trends and financial market indicators, we believe that the economy, capital markets and M&A levels will make a strong resurgence and do so quickly.

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The underlying themes driving this opinion: 

1. The speed and size of the Federal Reserve (Fed) intervention and fiscal stimulus measures
2. The rise of private equity (PE) and growth of dry powder over the last decade
3. Low-interest rate environment
4. Health of the financial system and alternative lenders
5. Election year dynamics
6. Potential for a scientific remedy to the scourge

Once social distancing guidelines are relaxed, the recovery is likely to favor service-oriented businesses with technology-enabled and asset-light models. While traditional manufacturing and retail companies have experienced a high-degree of disruption from labor forces being kept at home, businesses that rely on technological differentiation and highly-trained, knowledge workers are more likely to have navigated the great work-from-home experiment with at least a modest degree of success. Just as the Great Recession yielded a new set of lessons to operators and investors through the 2010s, the COVID-19 crisis will likely influence deal-making decisions for years to come, with a premium being placed on businesses that leverage technology and maintain a dynamic workforce.

As we continue through this difficult time, we remain excited and optimistic that we will overcome this virus and return to normal. We believe our scientific and entrepreneurial communities will work to overcome this situation and rise to the occasion, finding a treatment and eventual remedy for COVID-19.

We remain encouraged by the small and large acts of kindness that have captured the nation’s hearts and minds. Finally, we look forward to working through this situation and getting back to normal… doesn’t that sound good now?