Differentiated diligence after COVID-19
As dealmaking resumes, private equity and other buyers have an opportunity to earn outsized returns—as was the case on well-timed transactions after the 2008-09 recession. But finding value will require differentiated diligence. As in the last recession, there will be many smaller, messier deals—distressed assets and carve-outs. Finding “diamonds in the rough” will be even harder this time because of the economic disruption caused by the COVID-19 lockdown, which makes it exceedingly difficult to find true value in a sea of noisy data.
This makes the use of advanced diligence techniques essential. In this paper, we share six techniques that will need to be emphasized even more in the post COVID-19 deal world. These techniques help dealmakers gather intelligence that routine diligence can’t provide by seeing beyond reported numbers and expert insights to discover true sources of value (and barriers to value capture). Players that use differentiated diligence after COVID-19 can hope to match or exceed the returns that top players achieved after the last recession.
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Additional KPMG Insights
V-U-L-nerability: How will we emerge from the Great Lockdown?
COVID-19 has exposed vulnerabilities in our economic, social, and health systems. Most economies are likely to see GDP declines in Q2 that dwarf the slowdown experienced during the global financial crisis in 2008-2009. Many industries will be forever changed by shifts to digital modes of operating during COVID-19. KPMG estimates that U.S. growth will likely take until 2021 to be positive on a year-over-year basis and until after 2024 to reach 2019 levels. KPMG’s Office of the Chief Economist is monitoring the economic impact of COVID-19 daily and provides frequent updates to this economic analysis.
COVID-19: The new M&A landscape in banking
America’s banking industry has been tested before by a financial crisis, but the COVID-19 virus presents a new challenge for banks to overcome as banks navigate a lockdown. In this podcast, Tim Johnson, Financial Services Deal Advisory Leader, discusses the current and future M&A landscape and his views on the types of banks that will be most significantly impacted by COVID-19.
COVID-19: The M&A insurance landscape
In this podcast, Ram Menon, Advisory Global Head of Insurance, shares his insights on how insurance companies are approaching M&A decisions in the wake of COVID-19. Ram also provides commentary on medium and long term M&A strategic priorities for insurance companies, including expanding technological capabilities, capitalizing on transformational opportunities, and adopting digital business models.
While front line workers continue to fight the COVID-19 virus on the ground, public policymakers, government leaders, and medical professionals are determining the various avenues to restarting our society. Government and healthcare leaders are debating different testing approaches, use of risk-based models, and technological solutions to help fight another surge in cases. “Restarting America” discusses the options available to the decision makers regarding the reopening of society.
