Government Technology

Current Market Observations

Economic Outlook

• Volatility in the public markets will likely remain as investors, businesses, and policy-makers evaluate rapidly evolving COVID-19 developments

• Economists and industry analysts expect a meaningful decline in GDP in 2Q‘20 and 3Q‘20, while they debate the shape and timing of the recovery

Buyer Sentiment

• The desire to invest remains – buyers are actively seeking to deploy capital

• Private equity firms and strategic acquirers have focused on meeting near-term operational needs and assessing medium- to long-term impact of COVID-19

• Despite economic uncertainty, financial sponsors have record levels of capital to deploy, and many are communicating that they are “open for business,” while acknowledging high-quality deal flow will be limited

• As capital markets stabilize, companies with strong liquidity positions will be well-positioned to pursue acquisitions that accelerate growth

Debt Markets

• In contrast to the first half of 1Q`20, debt markets have shifted to a risk-off mentality

• Concerns over liquidity and funding availability contribute to uncertainty regarding the duration of the COVID-19 risk mitigation focus

M&A Valuations

• COVID-19 has pushed timelines for many transactions, but select deals are still closing successfully. Some may be temporarily on hold and others are preparing for market and carefully weighing timing

• Companies that prove their ability to weather the current circumstances will receive significant interest and garner premium valuations