ArkMalibu Weekly Update: Assessing the Impact of COVID-19

Below are our weekly summary thoughts on the M&A market, the economic outlook, selected opportunities and reasons to be optimistic.

We will update you every Friday as the situation continues to unfold.

M&A Market Outlook

The U.S. & Canadian M&A market continues to grapple with tumultuous market conditions and timing uncertainty. Over the past 7 days, we have seen 153 deals close. We will continue keeping close watch on weekly deal volume as we look for the inflection point that signals a return to normalcy in the capital markets.

Economic Outlook

• St. Louis Federal Reserve Chair James Bullard predicts the economy will “boom” in 4Q20 and 1Q21 from a surge in production due to pent up demand and a resurgence of projects previously put on hold due to COVID-19
• Suggests 3Q20 should be viewed as transition quarter and 2Q20 as a national pandemic adjustment period and planned partial government shutdown (not a conventionally defined recession)
• Views this economic period as akin to driving your car through a construction zone. You have to slow down but not because there are systemic issues with your vehicle

Select Areas Ripe for Investment

• Virtual and Augmented Reality: rising number of applications across many industries, particular focus on healthcare
• Cybersecurity: rollout of 5G networks and use of connected IoT devices will accelerate dramatically, increasing on a massive scale vulnerability to cyberattacks
• Ghost & Cloud Kitchens: stronger reliance on delivery models, cloud kitchens manage costs by sharing ingredients, equipment, staff
• Education: offering of virtual programs, massive online open courses (MOOC’s), cyber training for employees

Good News We’ve Been Reading:

Advancements in Testing & Preparedness

• Abbott Labs has developed a rapid coronavirus test able to deliver positive results in as little as five minutes

Vaccine Development

• More than 50 companies are working to provide a vaccine and are competing to be backed by the US Government

Economic and Social Impact

• Time after the Great Depression was more progressive than any other time in history in terms of innovation
• We expect to see a surge in willingness to solve and overcome problems as we come out of the other side of this

“This could be a victory and recovery story of a resilient and determined people, of a healthcare system that responded in record time, and a force for good in socially changing and forming new relationships across the globe that we have never seen before. Adversity wins respect; it is always gained on ground where difficulty and challenge reside.”

– Lieutenant General (Ret.) R.L. “Van” VanAntwerp

Retired 3-star general who led US Army Corps of Engineers (USACE) $12 billion Hurricane Katrina rebuild program.

ArkMalibu is happy to answer any questions you may have and to offer guidance during this challenging time. Please visit our website (https://www.arkmalibu.com) for more information.

Until our next update, we send best wishes to you and yours for safety and health.