Partnering to Survive Today – and Thrive Tomorrow

Apr 2020

The record levels of dry powder at the beginning of 2020 led to predictions of robust M&A activity. However, COVID-19 has thrown investors and businesses a curveball.

Debt financing is proving harder to access during COVID-19.   Many businesses entered the pandemic already highly leveraged. New, more expensive debt is less attractive. Many transactions in progress were underpinned by pre-COVID-19 forecasts that now look like works of fiction. Some deals are being delayed, some threatened altogether. Businesses are seeking alternative solutions.   We believe that partnering should be considered alongside other, more typical solutions.

Partnering opportunities differ, depending on company scale and situation:

Near-Term Capital Need: A partnership with a strategic could provide much-needed liquidity, but also potential access to non-financial benefits (a salesforce, distribution channels or a robust supply chain).

Positive alternative to going “on hold”: A technology company putting an exit on hold until valuations stabilize could boost the speed of value recovery by partnering intelligently with the right corporation.

Access to Previously Out of Reach Opportunities: Corporates keen to extend technology capabilities have been reluctant to invest while valuations were sky-high. Now, in return for valuable cash and cooperation, formerly unwilling sellers may consider the right partnering deal.

“Essential” and “non-essential” business partnerships: Working together now could provide a lifeline and generate competitive advantage as we emerge from the crisis.

Partially liquidating non-core assets: Releasing cash through a partial stake sale to a company whose long-term commitment could generate faster value recovery post-Covid-19.

Cost- and resource-saving consortia: Looking at ways to share manufacturing, distribution or property infrastructure—though this might prove complex to execute at speed.

 

Done thoughtfully and well, such options can provide an antidote to current challenges and create a platform for speedier recovery and growth.  Lincoln International is the only global investment bank offering specialist partnering advice from experienced experts. These expert services are offered to all Lincoln’s clients alongside our broader capabilities, including M&A, Debt Advisory, Valuations & Opinions, and Restructuring Services.

Summary

Meet our Senior Team

Related Perspectives

Safeguarding the Smart Grid: Why Partnering Makes Sense for Utilities & Infrastructure and Cybersecurity Companies

The threat of cyberattacks has increased across the globe, with organizations seeing a 67% increase in the last five years. While protecting against cyberattacks is top-of-mind for nearly every business, for critical […]

Better Together… or Apart? Solutions for Struggling Joint Ventures and Minority Stakes in Portfolio Companies

As the world battles COVID-19 and businesses experience cash constraints, underperforming joint ventures and minority stakes will come under the microscope. Following evaluation, there are usually two basic options: 1. Exit the partnership […]

Partnering to Survive Today – and Thrive Tomorrow

The record levels of dry powder at the beginning of 2020 led to predictions of robust M&A activity. However, COVID-19 has thrown investors and businesses a curveball. Debt financing is proving harder […]

Better Together: Critical Early Steps Towards JV and Partnership Success

Marc van Grondelle and Emma Blackley of Lincoln’s global Joint Ventures & Partnering practice unpack why JVs and partnerships are so often overlooked and how to execute them without mishap. Why is […]