Insight helps protect and create value in an uncertain environment
CohnReznick: Best Tax Adviser – The onset of the coronavirus pandemic postponed or brought a halt to most deals in the private equity pipeline, shifting the emphasis of most firms to the health and survival of their portfolio companies. However, as private equity firms have gained more insight into today’s uncertain market conditions, they have increased their comfort level and deal activity has begun to accelerate. As uncertainty remains the order of the day, firms look to their partners for support in creating and finding value.
“Most GPs have been a resilient group through the coronavirus pandemic. To maintain this strength, they need access to timely and relevant intelligence to make good fund, portfolio company and transaction decisions. In addition, they need creative solutions to complex challenges,” comments Jeremy Swan, Managing Principal, Financial Sponsors & Financial Services industry practice at CohnReznick.
The coronavirus affected all industry sectors, with some contracting and others expanding. As a result, each private equity firm’s needs are even more unique in this environment, depending on the composition of their portfolio.
Swan expands on this: “From an operational perspective, some may be focusing on supply chain improvements, workforce enablement, or cash management. Others may be exploring distressed investments as an opportunity to add a new platform or seeking to acquire spin-offs from strategics who are looking to shed assets.
“For both buyers and sellers, it’s important to give careful thought to the industry in which they operate and how they might mitigate risk areas. While so much is unknown and outside of one’s control, proactively addressing potential issues upfront, while being flexible and nimble, will ensure a more favourable outcome. These actions may not prevent a change in EBITDA multiples or valuations, but it’s better to take an offensive posture rather than a defensive one to make the most of this potentially tough situation.”
GPs are facing a number of challenges which include navigating government stimulus programmes during the transaction process, continued restrictions on travel and face-to-face meetings, uncertainty due to the outcome of the US presidential election and US tax policies as well as the realisation of the full impact of the Covid-19 crisis on the final purchase price of transactions.
“Over the course of the investment lifecycle, certain defining moments have the potential to generate significant value. Too often this value goes unrealised as firms lack the market intelligence, experienced resources, and industry expertise to make well-thought decisions in an environment that may be uncertain, unstable or unfamiliar,” Swan notes.
The private equity team at CohnReznick supports clients by providing insight into how value is created and preserved to achieve their desired vision. These professionals also possess the technical skills and relationships needed to realise value, together with the ability to capture that value with speed, efficiency and integrity.
Throughout the pandemic, CohnReznick demonstrated its ability to help clients make well-thought decisions amid uncertain market conditions. To this end, the firm expanded its transaction advisory services team and its restructuring and dispute resolution team to assist clients in protecting and creating value.
“Our firm has the right team and capabilities in place to provide intelligence and industry insight to support action. We offer tailored solutions that leverage exceptional analytics and financial modelling tools. In addition, we have connected leaders who mobilise resources on demand to deliver value when clients need it most,” Swan concludes.
Managing Principal, Financial Sponsors & Financial Services, CohnReznick
Jeremy Swan is the National Director of CohnReznick’s Financial Sponsors & Financial Services Industry practice and also leads the efforts of the Firm’s M&A Consulting Services practice. With more than 20 years of experience advising financial sponsors and emerging private and large, multinational portfolio companies, Jeremy has extensive experience working with financial sponsors as both an investment banker and a consultant. He has expertise in mergers and acquisitions, IPO readiness, financing transactions, post-acquisition integration, and operational and financial due diligence.