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. These thoughts are additive to our previous weekly updates.

Reasons for Optimism in M&A and Capital Markets

  • Median deal pricing in Q1 2020 came in at 10.5x EBITDA (Read More Here)
    • Middle market was relatively strong, ending quarter down only 25% from its 4Q 2019 marks in deal volumes and 34% in deal value
  • 103 deals closed in the U.S. & Canada over the past 7 days
  • Brent oil futures surged after tumultuous week as supply cuts from OPEC producers & slower U.S. inventory builds are reported
  • Rush to raise cash in high-yield bond market picked up momentum, with US Foods Holding Corp., Gap Inc., and MGM Resorts International and others completing new bond sales
  • House approved $484 billion relief bill to replenish small business aid program, including:
    • $310 billion for Paycheck Protection Program
      • $60 billion of which will go to small lenders
    • $60 billion for SBA disaster assistance loans & grants
    • $75 billion in grants to hospitals
    • $25 billion to bolster coronavirus testing, a core piece to restarting the economy

Good News We’ve Been Reading:

Signs of Economic Recovery in Hotspots Across Globe

  • United States governors devising plans to ease into reopening states
  • South Korea lifted closure of high-risk venues such as churches, bars and sporting facilities, after number of new infections dropped to single digit the day before
  • Germany’s retailers with shops up to 800 square meters opened this week, including car dealerships, bike shops, book stores
  • Spain allowed manufacturing and construction work to resume, allowing nearly 4 million workers to return to work

Vaccine Development

  • To date there are over 115 coronavirus vaccines in development, including newly introduced trial at University of Oxford and anticipated trial at Takis
  • Johnson & Johnson, Pfizer, Regeneron Pharmaceuticals, and others ramped up production capabilities to make hundreds of millions of doses available quickly, should studies support their worth

Updates in Testing 

  • FDA authorized Lab Corp’s coronavirus test as first to allow people to collect samples at home
  • Early reporting showed 21% of the 1,300 people tested in New York City for coronavirus antibodies have them
    • Indicated 1.7 million+ within the city and 2.6 million+ in the state have been infected already, drastically lowering mortality rate
  • Eli Lilly will begin human antibody testing as soon as May, yielding results by late summer
  • Germany carried out Europe’s first large-scale antibody test, with 5,000 new blood samples tested every 14 days

Opportunities in Healthcare

  • Several telemedicine entrepreneurs have been inundated with interest from hospitals seeking to cope with pandemic
  • Atomo Diagnostics, maker of blood-test device that can produce coronavirus results in 15 minutes, went public on the Australian Securities Exchange

 

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.

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